Senate Advances Crucial Bill to Strengthen Small-Scale Enterprises in the U.S.
In the current political landscape, the One Big Beautiful Bill Act (OBBBA) has gained momentum, with the U.S. House of Representatives and the Senate Finance Committee both having made significant strides in its progress. As of late June 2025, the House has passed its version, and the Senate Finance Committee has released its own version of the bill.
### Current Status
The bill has garnered strong support in the House, aligning with President Trump’s domestic agenda and moving forward early in the current term. However, the Senate Finance Committee’s version presents some differences, particularly in the taxation provisions affecting small businesses.
### Potential Effects on Small Business Taxation
1. **Small Business Deduction:** The House bill proposes to make the Section 199A Qualified Business Income (QBI) deduction permanent and increase it from 20% to 23%. The Senate bill maintains the QBI deduction at 20%, but increases the phase-in limit, benefiting some small business owners. Both versions aim to simplify limitations on higher earners, potentially allowing more businesses to benefit.
2. **Qualified Small Business Stock (QSBS):** The House bill does not change the QSBS rules. In contrast, the Senate proposal would significantly enhance QSBS benefits by exempting a larger portion of gain from taxation on QSBS held for varying periods, increasing the exemption limit from $10 million to $15 million, and offering up to 100% exemption on gains after 5 years of holding.
3. **Overall Economic Impact:** Estimates suggest that the bill would increase GDP growth by 0.4% to 1.1% over the next decade, partially through tax reforms that include benefits for small businesses. The bill aims to reduce tax burdens that have led to exporting jobs abroad, helping to retain and grow American businesses domestically.
### Summary
The One Big Beautiful Bill Act, if enacted in its current forms, could represent a substantial tax relief and economic boost specifically tailored to support and grow small businesses in the U.S. The proposed changes would primarily reduce taxes on small businesses through a permanent and increased QBI deduction, enhanced expensing rules, and improved incentives for investment in small business stock (under the Senate version).
These provisions are designed to stimulate domestic economic growth, retain jobs in the U.S., and encourage investment in American businesses, which could significantly benefit small business owners by lowering their effective tax rates and increasing capital availability.
However, the act must pass through a divided Congress, where differing priorities and political factors could complicate its journey. Small businesses can leverage relationships with local representatives to voice their support for policies that bolster their growth and sustainability.
Understanding the implications of the One Big Beautiful Bill Act can help business leaders prepare for potential changes and challenges ahead. If the 20% Small Business Deduction is not made permanent, it could translate to higher operational costs for small businesses, potentially affecting their growth and sustainability.
Staying connected with advocacy organizations and keeping abreast of legislative moves will be pivotal in navigating this crucial period for small business growth and sustainability. An estimated 30 million businesses could face tax increases in just a few years if the 20% deduction is not made permanent.
Small business owners can access the full NFIB letter for more information about the One Big Beautiful Bill Act and engage with Senators to support the Act and the Graham substitute amendment to H.R. 1. By doing so, they can help secure permanent tax relief for over 33 million small businesses nationwide and pave the way for a more prosperous future for their businesses.
The One Big Beautiful Bill Act, in its current proposed forms, could provide substantial tax relief and economic growth opportunities specifically for small businesses in the U.S., as both the House and Senate versions include changes to improve the QBI deduction and incentives for investment in small businesses.
However, the Act's progress may be influenced by political factors within a divided Congress, underscoring the importance for small businesses to establish and maintain connections with local representatives to advocate for policies that support their growth and sustainability.
