The National Federation of Independent Business (NFIB) has released a report outlining potential implications if the 20% Small Business Tax Deduction in Massachusetts is not made permanent. The report, published on April 15, 2025, suggests that the more than 722,000 small businesses in Massachusetts might face higher taxes without this deduction. It underscores potential negative impacts on the Massachusetts economy and the U.S. overall, including economic slowdown and increased financial strain.
The report highlights the disparity between tax rates for small businesses and larger corporations if the deduction is not upheld. The C-Corp tax rate in Massachusetts would remain at 29%, while the small business rate could rise to 48.6%. Conversely, if the deduction is maintained, Massachusetts is expected to gain 27,000 jobs annually over the next decade. Additionally, a $2.01 billion GDP increase per year is projected in the first ten years, with $4.15 billion annually beyond 2035.
“Small businesses don’t just create jobs, they create opportunity, innovation, and strong Massachusetts communities,” stated Christopher Carlozzi, NFIB Massachusetts State Director. He warned that letting the deduction expire could stifle growth and endanger numerous small businesses, urging lawmakers to act.
The 20% Small Business Tax Deduction was introduced as part of the Tax Cuts and Jobs Act of 2017. Its potential expiration threatens increased tax burdens for small business owners across the nation.
