Centennial State News

The National Federation of Independent Business (NFIB) has published a report detailing the impact of the potential expiration of the 20% Small Business Tax Deduction on Colorado businesses. This deduction, a part of the Tax Cuts and Jobs Act of 2017, is set to face expiration unless Congress acts to make it permanent. The report emphasizes the pressure Colorado's 715,000 small businesses might endure if this tax provision is not extended.

Michael Smith, the NFIB Colorado State Director, has voiced concerns over the potential tax increase, saying, “If the 20% Small Business Tax Deduction expires, small businesses will be limited on hiring and investing in our communities. Congress must support small businesses and make this deduction permanent.”

The report also highlights a disparity in tax rates that may ensue: while the corporate tax rate for C-Corps in Colorado would be 25.4%, the small business rate could rise to 44%. This contrast is further emphasized by the projection that making the deduction permanent could align tax rates, fostering economic growth. Colorado could potentially see 26,000 new jobs annually for the next decade, accompanied by significant GDP growth.

Without the deduction, the NFIB warns that nine out of 10 small businesses might experience a heavier tax burden, posing risks to job creation and economic stability nationwide. The organization encourages Congress to take action to avoid these negative outcomes.

For those interested in the detailed findings or NFIB's advocacy, the report is accessible online.