The National Federation of Independent Business (NFIB), a prominent small business advocacy organization, has released a report emphasizing the significance of the 20% Small Business Tax Deduction for New Mexico. The report outlines the benefits of making this deduction permanent and the potential negative impact if it is not.
According to the report, New Mexico’s 166,000-plus small businesses could face substantial tax hikes unless Congress acts to make the deduction permanent this year. It also warns of broader economic repercussions, including a potential slowdown and increased financial pressure on local businesses.
Should the deduction expire, a considerable disparity between tax rates for small businesses and larger corporations could arise. The C-Corp tax rate in New Mexico would stay at 26.9%, while the small business rate could escalate to 45.5%.
Alternatively, keeping the deduction might yield notable economic benefits, such as leveling the playing field for small businesses. The state could potentially see the creation of 7,000 new jobs annually over the next decade, alongside an annual GDP growth of $308 million in the first decade, increasing to $636 million per year after 2035.
Jason Espinoza, NFIB New Mexico State Director, remarked, “It was a huge relief when four proposals adding more costs and compliance onto the backs of small business owners in New Mexico were defeated in the Legislature. Now, Congress needs to add to that relief by not letting the 20% Small Business Deduction expire at the end of the year.”
The 20% Small Business Tax Deduction is a significant provision of the 2017 Tax Cuts and Jobs Act. It has enabled small business owners to expand, hire more employees, and raise wages. NFIB’s report stresses that failure to cement this deduction into law could impose a higher tax burden on nine out of ten small businesses, threatening employment and economic stability nationwide.
NFIB has been advocating for America’s small and independent business owners for over 80 years. As a nonprofit, nonpartisan organization, it remains committed to these enterprises. Further updates on small-business news in New Mexico can be accessed at www.nfib.com.
