From Main Street shops to manufacturers, small businesses are the backbone of the American economy, creating good jobs and driving innovation. The possibility of the expiration of certain provisions in the Tax Cuts and Jobs Act (TCJA) at the end of this year are of the biggest concerns for these businesses. And with recession fears in the news, Congress must act quickly to make these tax provisions permanent and help protect the economic gains achieved under the TCJA. Doing so would help ensure a strong, growing economy heading into 2026 and the midterm elections.
In my recent testimony before the House Committee on Ways and Means, I provided a first-hand glimpse into the unique, economic fabric of our country that is family-owned businesses, who are faced with the prospects of a $4.5 trillion tax increase and how that might impact their community, businesses and larger economy.
The TCJA contains policies that are critical to small businesses that operate as pass-through entities – such as sole proprietorships, partnerships and S-corporations – which constitute the vast majority of businesses in the U.S.. These Main Street businesses are not taxed as traditional well-known corporations, instead their income is “passed-through” to the owners and taxed at the their individual level.
One important TCJA policy set to expire this year is the 20% qualified business income deduction. This small-business friendly policy levels the playing field with larger corporations who received a massive tax cut in the TCJA from 35% to a permanent 21% corporate rate. Another impacted tax policy is the tax treatment of capital investments which encourages the purchase of new equipment, technology and infrastructure, and has been a game-changer for businesses of all sizes. Extension of these two policies in particular would show the American public that the GOP and President Donald Trump are focused on Main Street, and not just Wall Street, to drive long term economic growth and investment in American communities.
Additionally, the expanded Child Tax Credit (CTC) under TCJA has helped working families cover essential expenses such as childcare, education and healthcare. By making the expanded CTC permanent, Congress can continue to support parents and ensure that economic growth benefits all Americans.
And finally, the TCJA provided estate tax relief by allowing more families to pass down businesses without the fear of a 40% tax at death. Family businesses hit by the death tax face the risk of dramatically downsizing or liquidation, eroding the foundation of our communities. Currently the most popular tax bill in Congress is Senate Majority Leader John Thune and Republican Iowa Rep. Randy Feenstra’s Death Tax Repeal Act which enjoys the support of over 200 members on both sides of the Capitol.
Congress must act now to provide certainty to small businesses and working families. Waiting until the last minute to address these tax provisions creates instability, discouraging investment and delaying financial decisions that drive growth. Tax policy should not be a political football – it should be a tool for economic stability and prosperity. Now is the time for lawmakers to stand with American workers, small businesses and families by making these tax cuts permanent. The future of Main Street and the financial well-being of millions depend on it.
Michelle F. Gallagher, CPA/ABV/CFF is a strategic partner at Adamy Valuation and Gallagher, Flintoff & Klein CPAs in Michigan. She serves as an advisory board member of the Family Business Coalition.
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