Tax Increase Calculator Shows Impact on Businesses of Allowing TCJA to Expire

A new tool from the U.S. Chamber of Commerce can help businesses understand their potential tax increases if the 2017 Tax Cuts and Jobs Act (TCJA) is allowed to expire at the end of 2025.

Several provisions of the TCJA, including the 20 percent deduction for S-corporations, are scheduled to sunset this year unless Congress takes action to extend them or to make them permanent. If the pass-through deduction expires, the top marginal tax rate on affected businesses will increase by 10 percentage points to 39.6 percent. Because the TCJA permanently lowered the corporate income tax from 35 percent to 21 percent, the 20 percent deduction is especially important for keeping small businesses on a level playing field with corporations.

According to a new poll from the U.S. Chamber, 64 percent of voters favor permanently extending the TCJA. That includes 81 percent of Republicans, 55 percent of independents and 53 percent of Democrats. Additionally, 65 percent of voters said they are more likely to support a candidate who votes to make the tax cuts permanent.

When it comes to individual components of the TCJA, the 20 percent deduction for pass-through businesses is popular among voters, with 73 percent supporting making it permanent. Seventy-five percent also support permanently restoring the deduction for research and development and 73 percent favor making full capital expensing permanent.

“Permanently extending the TCJA's pro-growth reforms will create more certainty and stability for businesses to plan, invest in and grow both their operations and their headcounts,” the U.S. Chamber said.