What’s happening: If Congress doesn’t act, more than 22 million privately held and family-owned businesses could see a major tax increase starting next year.
Fill me in: In 2017, Congress lowered corporate tax rates and created a 20% pass-through deduction for businesses operating as sole proprietorships, partnerships, and S corporations. However, the deduction is scheduled to expire at the end of 2025.
The breakdown: A pass-through tax means that business profits are taxed on the owner’s personal tax return instead of being taxed separately for the business. This includes businesses like sole proprietorships, partnerships, and S corporations, where profits flow directly to owners and are taxed at individual rates.
Why it matters: Allowing the deduction to expire would amount to a tax increase on millions of businesses, leading to less hiring, lower wages for workers, and a more challenging path to success for millions of Americans. Wyoming won’t be exempt from the issues this would cause, with a large number of businesses in the state being pass-through.
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