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Main Street is the biggest winner of the House Republican tax bill. Here are eight ways the bill helps American small businesses expand, hire, raise wages, and reinvigorate their local communities:
1. Increased Pass-Through Deduction
The bill raises the small business tax deduction from 20 percent to 23 percent—a provision that Job Creators Network has been the loudest voice in favor of. This deduction is claimed by 26 million small businesses each year and will result in significant savings for Main Street businesses, the backbone of the American economy.
2. Permanent Individual Tax Rate Reductions
The bill makes the individual tax rate cuts from the 2017 Tax Cut and Jobs Act (TCJA) permanent, including top marginal rates, ensuring a continued lower tax burden for the 95 percent of small businesses that file as pass-throughs, including successful small businesses.
3. Restoration of 100 Percent Bonus Depreciation
The legislation reinstates 100 percent immediate expensing for capital investments, allowing small businesses to immediately deduct the full cost of equipment and property, encouraging reinvestment, expansion, and modernization that will boost productivity and help small business manufacturers and contractors.
4. Enhanced R&D Expensing
The bill similarly allows small businesses engaged in domestic research and development immediate expensing of R&D costs, which many small businesses need to stay ahead of foreign competition, promoting innovation and growth.
5. No Tax on Tips and Overtime Pay
The bill exempts tips and overtime pay from federal income tax, providing relief to small businesses in service industries and their employees, as well as boosting the gig economy that’s a growing part of the American small business ecosystem.
6. Expanded Standard Deduction
The bill boosts the standard deduction, simplifying tax filing and reducing taxable income for small business owners.
7. Support for Domestic Manufacturing
The bill includes tax credits and deductions tied to domestic content and U.S. employment, designed to encourage companies to produce in the U.S. rather than offshore.
8. Simplified Tax Code
The bill streamlines and simplifies the tax code, promoting standard deduction use over itemizing, making investment and business tax planning easier, and reducing or removing provisions that caused complexity, allowing small businesses to file their taxes faster and easier.
This pro-growth bill will create a more vibrant small business economy, increasing opportunities, customers, and earnings for Main Street. The President’s Council of Economic Advisers estimates that over the next four years, the bill will increase real economic growth by up to 5.2 percent, create or save up to 7.4 million full-time American jobs, increase investments by up to 14.5 percent, and boost wages by $11,600 per worker. This bill will allow small businesses to usher in the next American economic Golden Age.
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