NAED, NAW Call on Congress to Save Small Business Tax Deduction

WASHINGTON — NAW joined over 200 trade associations, including NAED, in sending a letter to Sen. Steve Daines (MT) and Rep. Lloyd Smucker (PA-11) voicing support for their legislation to make permanent the Section 199A tax deduction for small businesses.

“The Small Business Deduction under Section 199A of the tax code is vitally important to many of our NAED distributors. The 20% deduction allows pass-through businesses to compete on a level playing field with companies that pay under the corporate rate,” said Bud DeFlaviis, NAED Director of Government Relations. “Certainty is vital in business, and without this provision permanently in place, many of these companies will have to face tough decisions on hiring, investment, inventory, and the future of their operations. We applaud the efforts of our federal policymakers, including Senator Daines (MT) and Congressman Smucker (PA), who are fighting to keep this provision alive.”

“The 199A Small Business Deduction is crucial for wholesaler-distributors. Over 95 percent of businesses in the U.S. – including most wholesaler-distributors – are pass-throughs and collectively employ more than 78 million American workers. Eighty-one percent of wholesaler-distributors have less than 20 employees and rely on the Section 199A deduction to remain competitive,” said Eric Hoplin, President and CEO of NAW. “The 20% small business deduction, created by the Tax Cuts and Jobs Act, allows distributors to reinvest in the 6.1 million workers they employ by giving them resources to hire, raise wages, and provide extensive benefits such as health and retirement, career development programs, formal profit-sharing, quarterly cash bonuses, financial workshops, and volunteer paid time off.”

The small business dedication expires at the end of 2025, and absent congressional action, pass-throughs could face a top tax rate of 39.6.

“As the son of a contractor, I’ve seen firsthand the hard work it takes to keep a small business flourishing,” said Daines. “It’s absolutely crucial that we pass this legislation to prevent a 20 percent tax increase for hardworking Montanans and I’ll keep fighting for ways to support Montana small businesses, which provide the majority of jobs in our state.”

“Small businesses are the economic engine that drives growth and jobs in South Dakota and across our country,” said Majority Leader John Thune (R-S.D.). “This legislation is critical to permanently extending a key provision from the Tax Cuts and Jobs Act and ensuring our small businesses and farms and ranches are not hit with a crippling tax hike at the end of 2025.”