NFIB, a leading advocate for small businesses, has released a report concerning the implications of the potential expiration of the 20% Small Business Tax Deduction in South Carolina. The report indicates that the 507,000 small businesses in the state might face increased taxation if Congress does not make this deduction permanent this year. Such a move may have severe consequences, including an economic slowdown and heightened financial pressure on local businesses.
Currently, the C-Corp tax rate in South Carolina is 26%, but without the deduction, small businesses could see their tax rate spike to 45.8%. The report suggests that extending the deduction permanently could create significant economic benefits, ensuring small businesses maintain competitiveness. Projections include 18,000 new jobs annually over the next ten years and a projected annual GDP increase of $838 million in the first decade, with $1.73 billion per year beyond 2035.
NFIB State Director Ben Homeyer emphasizes, “This deduction has helped level the playing field for small businesses. Losing it would be a huge setback for Main Street and make it harder for them not only to compete but to grow, add jobs, and support their communities.”
The 20% Small Business Tax Deduction is a part of the Tax Cuts and Jobs Act of 2017 and is instrumental for small businesses to expand operations, hire, and raise wages. Failing to make the deduction permanent could result in nine out of ten small businesses facing a drastic tax increase, thereby threatening job security and economic stability nationwide.
