Minnesota State Wire

The National Federation of Independent Business (NFIB) released a report discussing the potential impact of a small business tax hike in Minnesota. The focus is on the 20% Small Business Tax Deduction and the benefits it would bring to the state if it were made permanent. According to the report, over 547,000 small businesses in Minnesota could face higher taxes if Congress does not make the deduction permanent this year.

The report draws attention to the difference in tax rates between small businesses and larger corporate competitors should the deduction expire. In Minnesota, the C-Corp tax rate stands at 30.8% while the small business rate could jump to 49.5%. Keeping the deduction intact is projected to offer economic advantages, presenting a level tax playing field. The deduction could help create 25,000 new jobs annually over the next decade along with a GDP increase of $1.43 billion per year initially and $2.95 billion annually after 2035.

“Minnesota small businesses have a lot on their hands with rising costs, burdensome regulations, and workforce shortages,” said NFIB Minnesota State Director Jon Boesche. He emphasized the urgency for Congress to act, warning that allowing the deduction to expire would pose a significant challenge to small business owners.

The 20% Small Business Tax Deduction, established under the Tax Cuts and Jobs Act of 2017, has supported numerous small businesses by enabling them to grow and employ more workers. Should Congress not make it permanent this year, most small businesses will face increased tax burdens, posing risks to jobs and economic stability nationwide.

Find more information about NFIB’s advocacy, as well as Minnesota's specific report, at: https://www.nfib.com/wp-content/uploads/2025/04/NFIB-20-Small-Business-Deduction-Impact-MN.pdf