Small businesses make up 99.9% of all American businesses, but they are too often ignored in Washington, and the debate around the One Big Beautiful Bill Act is no exception. While there has been discussion about the bill’s price tag and spending cuts, less attention has been paid to how the bill’s tax policies will help small businesses.
Small businesses across the country, including the wholesaler-distributors and equipment manufacturers that we represent, have been hit by high prices and economic uncertainty and are in desperate need of policies that will help them grow. The “big, beautiful bill” achieves exactly that by enacting numerous tax policies to help businesses reinvest in their workforce, expand their operations, and grow the economy.
Recommended Stories
- On health, science must trump populism
- Trump tackles waste, fraud, and abuse in Obamacare
- The dangerous appeal of Zohran Mamdani
For instance, the legislation makes the 199A small business deduction permanent and expands it to 20%. This will provide relief and certainty to over 25 million businesses, according to IRS data. Since it was first enacted in 2017, the deduction has helped support 2.6 million jobs, $161 billion in annual employee compensation, and $325 billion in GDP, based on research by EY.
The legislation also includes key provisions that will help small businesses invest, such as the restoration of immediate expensing for research and development costs and a 100% bonus depreciation for investing in new equipment. Restoring R&D expensing — a policy that existed for 70 years until it expired in 2022 — will help businesses innovate, adopt the next generation of technologies, and stay competitive. Similarly, 100% bonus depreciation will help businesses invest in new equipment and machinery by allowing them to deduct these costs immediately, rather than depreciate them over many years.
In addition, the One Big Beautiful Bill Act expands and makes permanent the estate tax exemption, providing relief for family-owned businesses. Currently, family-owned businesses must pay the 40% death tax every time they pass the business down from one generation to the next. These businesses are often asset-rich but cash-poor. Instead of taking out loans, liquidating existing assets, or deferring new investments in technology or equipment, this bill would enable more family-owned businesses to invest more in themselves.
There is clear evidence that these policies and other tax cuts will help workers and small businesses across the country. According to a report by the Council of Economic Advisers, over the next four years, the bill will increase long-run GDP by as much as 4.9% and raise annual real wages by as much as $7,200 per worker, or $10,900 for a family with two children.
This will build on the success of the 2017 Tax Cuts and Jobs Act, which helped create the strongest economy in modern history. Thanks to these tax cuts, the unemployment rate hit 3.5% in 2019, a 50-year low, while real median household income increased by $4,400 in 2019, or nearly 7%.
As a direct result of the TCJA, small businesses could expand or invest in new factories and warehouses, hire new workers, increase pay for existing employees, and offer new career development and benefit programs for the workforce.
For instance, First Supply, a fifth-generation plumbing wholesaler-distributor headquartered in Madison, Wisconsin, was able to reinvest in existing facilities, increase mentorship, apprenticeship, and wellness programs, and relaunch its e-commerce program.
BIG, BEAUTIFUL VOTE-A-RAMA AMENDMENTS: WHAT HAS BEEN PROPOSED, AND DID THEY PASS OR FAIL?
Over in Salisbury, North Carolina, the TCJA helped concrete paving equipment manufacturer Power Curbers invest in research and development. The company spent years and several million dollars — a significant investment for a company of its size — developing a new machine for mainline highway concrete paving. Without the tax incentives from the TCJA, the machine would not exist today.
If history is any indication, enacting pro-growth, pro-small business tax policies in the One Big Beautiful Bill Act will allow businesses to make even more investments that support workers and the economy. With the passage of the big, beautiful bill, lawmakers will demonstrate their commitment to helping America’s small businesses thrive and to helping the economy grow.
Kip Eideberg is the senior vice president of government & industry relations for the Association of Equipment Manufacturers, which represents off-road equipment manufacturers and suppliers. Alex Hendrie is the senior vice president of government relations at the National Association of Wholesalers-Distributors, which represents the wholesale distribution industry.