The Tax Burden on Small Businesses: A Critical Insight
The National Small Business Association (NSBA) has released its 2025 Small Business Taxation Survey, revealing alarming findings about the increasing burden of tax complexities on small businesses across the U.S. A primary concern addressed in the report is the expiration of the 2017 Tax Cuts and Jobs Act, a legislative change that many small business owners fear will lead to dramatic tax increases if not properly addressed by Congress.
The Impact of Pass-Through Tax Structures
Notably, 83% of small businesses operate as pass-through entities, which means they pay taxes based on personal income rates. This structure heightens their vulnerability to proposed tax hikes related to expiring tax cuts. According to NSBA President and CEO Todd McCracken, this situation forms a critical nexus of concern for small business owners. With many spending upwards of 20 hours annually on tax compliance, the time and complexity involved sends ripples through their day-to-day operations.
Unequal Taxation: A Platform for Debate
Adding to the urgency of the issue, over 90% of small businesses indicated that federal taxes impact their operations significantly, with one in three stating that the impact is substantial. Furthermore, a striking challenge highlighted by the survey is that more than half of small business owners often struggle to access necessary information from the IRS to comply with tax laws. This difficulty compounds the stress associated with tax administration, which is viewed as a larger burden than the financial costs themselves.
Calls for Predictable Tax Policies
As fears over tax legislation mount, small business advocates are calling for Congress to prioritize tax stability and long-term relief. Michael Canty, NSBA Board Chair, urged lawmakers to create predictable policies that ensure small businesses are not adversely affected compared to larger corporations. “As Congress embarks on any tax extender or tax reform discussion, it is imperative that small businesses are afforded tax stability, predictability, and permanency,” he reiterated, emphasizing the crucial need for tax parity.
The Bigger Picture: Economic Ripple Effects
The ramifications of tax uncertainties potentially extend beyond small businesses to the broader economy. By imposing burdens of complexity and unpredictability, small businesses may struggle to innovate or grow, leading to broader economic challenges. The NSBA has consistently warned of the detrimental impacts that sunsetting tax laws can have, advocating for comprehensive, yet straightforward tax reforms that foster an environment conducive to small business growth.
For anyone involved in small business, understanding this critical situation is vital. With the potential for significant changes ahead, staying informed can empower business owners to advocate for policies that protect their interests and promote economic stability.
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