PHOENIX (AZFamily) – Small businesses could face higher taxes on their income, not just here in Arizona but across the country.

The National Federation of Independent Business (NFIB), which advocates for small businesses, warns that a tax break in the Tax Cuts and Jobs Act of 2017 is about to expire.

“It is critical that this provision be implemented permanently,” said Chad Heinrich, director of the Arizona National Bureau of Investigation’s (NFIB).

With the passage of the Tax Cuts and Jobs Act, small businesses were offered a 20% deduction for qualified business income. Heinrich said this cut has had a big impact on Arizona businesses.

“Most of them said they hired employees, bought equipment and used the tax savings to grow their business,” Heinrich explained.

The discount expires at the end of next year.

Since several years have passed since this law was implemented, Heinrich says many companies are used to this being the norm.

Although the tax rate would return to normal on paper, he fears that small family businesses would treat the expiration of the regulation as a tax increase.

“This would likely be the largest tax increase on small businesses in decades. In fact, I can’t think of any other case where a shift or change would have such a big impact,” Heinrich said.

There is hope, however. Heinrich says the Main Street Tax Certainty Act was introduced in Congress but did not make it to the House of Representatives.

If passed, the tax cut would be permanent, but there is no information on when the House of Representatives will vote on it.

If this or another law containing a corresponding tax cut is not passed before its expiration date, small businesses will face a tax increase in 2026.

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