NSBW 2025: While tariffs dominate, small businesses worry about tax policies

Economic uncertainty driven by tariffs has been keeping CEOs up at night. The latest WSJ/Vistage Small Business CEO Confidence Index survey revealed that 72% of small businesses expect negative impacts from changing tariff and trade policies.

However, a growing proportion of small businesses is concerned about tax policies. In December, two-thirds (66%) of small businesses expected positive impacts from the new administration’s tax policies. Since the beginning of the year, that number has declined, reaching 27% in April. Small businesses likely expected swift action on reinstating favorable tax policies, but the new administration’s attention has been focused elsewhere.

The issue at hand? The expiration of the Tax Cuts and Jobs Act (TCJA) will impact small businesses’ ability to invest and scale. “Allowing small businesses to reinvest tax savings for growth is critical for communities and for the American economy,” says Tom Sullivan, senior vice president of small business policy at the U.S. Chamber of Commerce, “and delivering this message to members of Congress is a key priority for the Chamber this year.”

How the Tax Cuts and Jobs Act benefited small businesses

In 2017, the Tax Cuts and Jobs Act (TCJA) introduced significant tax reform to stimulate investment and economic growth. This law introduced measures that both reduced tax burdens and encouraged reinvestment.

Key benefits in the TCJA for small businesses included:

• 20% Qualified Business Income (QBI) deduction for pass-through entities like S corporations, LLCs, and sole proprietorships, reducing effective tax rates for eligible business owners.
• Corporate tax rate reduction from 35% to 21%, benefiting C corporations and making incorporation more attractive.
• Expanded Section 179 expensing and 100% bonus depreciation, allowing immediate deduction of equipment and capital investments.
• The doubling of the estate tax exemption, helpful for family-owned businesses planning succession.
• Temporary retention of the cash accounting method for more businesses, which simplifies financial reporting.
• Certain deductions were limited, including entertainment expenses and net operating losses, necessitating more strategic tax planning.

The expiration of these provisions will devastate small businesses’ ability to reinvest, hire and expand. Here, Sullivan shares some of the work that the U.S. Chamber is doing on behalf of small businesses, advocating on Capitol Hill:

Q: While taxes are your focus, how is the U.S. Chamber helping small businesses regarding tariffs and trade?

A: The number of small businesses that have reached out about the impact of tariffs has been at historic levels. The message is clear: they need immediate relief from the tariffs. We have a robust advocacy campaign to raise awareness about the harm of tariffs. We also ask that the administration exclude small businesses from tariffs, create a process for businesses to seek exemptions based on significant employment impacts, and exempt products that cannot be made in America. Our recommendations come after weeks of discussions with the administration — and have been taking place while the U.S. Chamber is aligned with the administration’s effort to provide small business regulatory relief and make several small business provisions in the 2017 tax law permanent.

Q: Our research last fall showed that small businesses were optimistic about the new administration’s tax policies, but that optimism has waned. What are the specific challenges you see ahead?

A: We believe that an antidote for the uncertainty felt on Main Street is swift work by Congress and the White House to prevent a massive small business tax hike that will happen at the end of this year, absent legislative action.

Our Growing America’s Future campaign advocates maintaining a pro-growth tax code to foster a robust U.S. economy. At a minimum, we are advocating for Congress in three specific areas:

1. Preserve competitive business tax rates. This includes maintaining our globally competitive 21% corporate income tax rate and permanently extending the 20% deduction for pass-through business income (section 199A).
2. Restore a pro-growth business tax base. Reforming our business tax base by permanently restoring the deduction for research and development (R&D) expenses, full capital expensing for certain business assets (100% bonus depreciation) and a competitive (EBITDA-based) interest deductibility standard.
3. Maintain a competitive U.S. international tax system. This entails adopting strategic, industry-neutral reforms to preserve the system’s competitiveness, benefiting both U.S. companies operating abroad and foreign companies investing in the United States while protecting the U.S. corporate tax base.

Q: How are small businesses making their voice heard about tax policy impacts?

A: Recently, members of the U.S. Chamber’s Small Business Council met with various congressional offices to share how federal tax policy impacts their businesses and local communities. They urged Congress to permanently extend the pro-growth provisions of the Tax Cuts and Jobs Act (TCJA). They advocated for:

• Making the TCJA’s pro-growth reforms permanent.
• Continuing the 20% deduction for pass-through business income as a critical source of capital for reinvestment in operations and workforce.
• Reinstating the deduction for research (R&D) expenses.

The sentiment of the Small Business Council members was captured by the U.S. Chamber and is shared below:

A competitive tax code promotes a healthy economic ecosystem. The more capital there is for people to invest in their businesses, the more they have the ability to hire and make improvements in their office spaces. The more money that’s in the system, the more generous wages they can provide to pay their employees. — Brendan McCluskey, President, Trident Builders, Baltimore, Maryland

It is personal, and people don’t always understand that. Small businesses are focused on impact — we focus more on who we can help and who we can give raises to, who we can give bonuses to, and who we can raise their commissions to. If they’re doing a good job, we’re willing to pay them. But that 20% deduction is going to make a big, big difference to small businesses, and it trickles down into everyday life. — Renee VanHeel, Founder and President of Pay It Forward Processing, Cape Creek, Arizona

[With a competitive tax code] I’ve been able to put more money into our local healthcare organization. We have a foundation that we support in a Cancer Center. We’ve been able to be more competitive on wages, improve our technology, and I’ve been able to buy a truck for my business in our area. We’ve been able to invest in those kinds of things and help our people with better contributions to their retirement plans. — Karen Olson Beenken, President and CEO, The Blue Rock Companies, Sidney, Montana

Having a 20% pass-through deduction has let me take my employees on annual retreats for essential team bonding. It’s helped me really provide benefits that I would not otherwise be able to provide. And now, I have a senior team that is with me and continues to need raises, bonuses, paid maternity leave, 4O1K matching … [Not being able to provide those things] is going to severely impact the team that I have and their families and their ability to stay at my company. — Michelle Mekky, Founder and CEO, Mekky Media Relations, Chicago, Illinois

While there is hope and a focus on continuing the TCJA, small and midsize business leaders should regularly review their tax structure with advisors to prepare for potential sunsets of key benefits like the QBI deduction. Whether these tax policies will continue or be reinstated remains to be seen, and hope is not a strategy.

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