Rushmore State News

The National Federation of Independent Business (NFIB) has released a report emphasizing the importance of the 20% Small Business Tax Deduction for South Dakota. This deduction, if made permanent, would significantly benefit the state's 94,000 small businesses, according to the advocacy group. The report warns that without the deduction, these businesses could face increased taxes, with serious consequences for the local economy and potentially leading to an economic slowdown.

The NFIB report outlines a concern that small businesses might experience a tax rate spike to 39.6%, compared to the 21% C-Corp tax rate if the deduction is not sustained. In contrast, maintaining the deduction would level the tax rate playing field, and potentially result in substantial economic gains. Projections suggest that South Dakota could see an annual increase of 4,000 new jobs over the next decade and GDP growth of $197 million annually, increasing to $407 million per year after 2035.

“South Dakota small businesses invest in our local economies and youth programs,” stated NFIB South Dakota State Director Jason Glodt. “If the 20% Small Business Deduction expires, Main Street will face a huge tax hike that will limit their ability to further invest in our communities. Congress must protect small businesses and make the small business tax deduction permanent.”

The 20% Small Business Tax Deduction was introduced as part of the Tax Cuts and Jobs Act of 2017. It has facilitated the expansion, hiring, and wage increases for millions of small business owners. The NFIB cautions that a failure by Congress to make this deduction permanent could impose a significant tax burden on nine out of ten small businesses, with potential negative impacts on employment and economic stability across the country.

For further details on the NFIB’s advocacy and access to the South Dakota report, visit: https://www.nfib.com/wp-content/uploads/2025/04/NFIB-20-Small-Business-Deduction-Impact-SD.pdf