The end of the TCJA, which sunsets on December 31, would be catastrophic for America’s 33 million small businesses—the backbone of the nation’s economy. They would lose the lower tax rates, 20% income deduction, and accelerated capital expensing that have been lifelines over the bad Biden economy. No wonder small businesses support making the TCJA permanent by a 5-to-1 margin. Small businesses are encouraged that President Trump and Speaker Johnson have united to pursue “one big, beautiful bill,” with tax cuts at its heart. Small businesses need tax certainty to invest, hire, and plan for the future. With no votes to lose in the House, Republicans are smart to lead with tax cuts in tandem with other priorities on the border and energy while political capital is at its highest. Rather than a pure extension, the tax cut bill needs a couple of tweaks to do even more good for small businesses. Consider the immediate expensing provision, which entrepreneurs have described as a “game-changer.” Under the TCJA, this 100% deduction has phased out by 20% annually and is scheduled to fall to zero in the years ahead. This limitation reduces small business owners’ access to capital and puts them at a competitive disadvantage with corporations, which are generally well-capitalized and can spread out their expenses over multiple years. To address this, lawmakers should not simply extend the current tax baseline. Instead, they should ensure annual 100% immediate expensing, which would allow small businesses to reinvest more in their operations, driving efficiency, expansion, and economic growth.

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