Tax Reductions for Small Business Investments are on the Horizon

Congress holds in their hands the ability to make a massive beneficial change for American small businesses with the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024). This bipartisan act involves the restoration and expansion of three significant business tax incentives:

• Deduction for domestic R&D expenses

• EBITDA standard for determining limitation on business interest

• 100% bonus depreciation

Why it matters: This tax relief act has monumental importance for small businesses; tax costs of domestic small business investments would be heavily reduced, and at the same time, tax certainty and simplicity would increase. On February 1, the act was received by the Senate after being passed by the House. It’s our hope that Congress passes this legislation quickly to reduce the harmful effects uncertainty on pro-tax provisions has had on American businesses.

By the numbers: Some small and medium-sized businesses have already begun laying off employees to compensate for the additional tax costs under current law. Failure to restore the deduction for domestic R&D expenses alone is expected to result in an additional tax increase of 32% (or $59,000 on average) for small businesses. Increased tax liabilities can profoundly impact small businesses’ ability to make capital investments, modernize, and grow their workforces. According to a recent Small Business and Entrepreneurship Council survey, a sobering 19% of small business owners reported that they may need to close their small businesses if R&D expensing is not soon restored.

WY We Care: Your Cheyenne Chamber is in full support of the passing of this act and have been advocating for it’s success. Pro business and growth legislation is essential for the wellbeing of American businesses, and your Chamber will continue to relentlessly advocate on your behalf.