This would hurt family-owned businesses across the country. Adding to owner uncertainties, the Biden Administration has proposed expanding the estate tax by repealing the use of stepped-up basis. Congress is also discussing raising the corporate tax rate and raising the top income tax rate on individually and family-owned businesses from 37% to 39.6%. One proposed mandate is limiting the Small Business Deduction (IRS Section 199A) which would make it difficult for employers to invest in their business and employees. Establishing a complicated and inflexible new federal-government-run family and medical paid leave program.

Mandating that employers provide paid sick leave and retirement accounts.

Enacting elements of the Protecting the Right to Organize (PRO) Act.

Imposes the 3.8% tax (NIIT, SECA) on all business income earned by S corporations, partnerships, and LLCs.

Almost one-third (32%) of small businesses report revenues still below 75% of pre-pandemic levels. Owners rely on strong profits to often support times of profit declines, which many owners continue to experience in the pandemic. And for small business owners, profit levels are not always consistent or predictable year to year.

Why are taxes so challenging for small business owners? Taxes reduce profits, and profits are the primary source of financing for small businesses вЂ“ financing owners use to increase wages, for capital investment, and expansion opportunities. Property taxes followed in fourth place, state taxes on business income ranked seventh, and tax complexity ranked eighth in problem importance. At the top of the tax list, federal taxes on business income ranked as the third most severe problem, with 20% reporting it as a critical issue.

Of the top ten most burdensome problems small business owners report, four are tax related. Tax related issues also rank high among small business problems.

Federal taxes for small business