The Biden Administration has proposed $3.6 trillion in tax increases for the 2022 federal budget, one of the highest tax increases the U.S. has ever seen, including increasing the current 21% corporate tax rate by one-third to 28%.
About one-third of Big “I" members nationwide are structured as C-Corporations and pay the corporate tax rate, so they would be on the hook for the 28% federal rate if it becomes law.
According to the Nebraska Chamber of Commerce, there are 10,391 employers in Nebraska across every sector that will see their taxes increase under this proposal, which includes 7,183 small businesses with fewer than 500 employees.
The Nebraska state corporate tax rate is 5.58% in the lowest tax bracket, so if the proposed federal tax increase becomes law, Nebraska C-corporations could face a combined federal-state corporate tax rate of 33.6%.
Ahead of these potential tax increases, remember that the Big “I” has your back. The Association will continue to strongly advocate against raising taxes on small businesses and Big “I" members.
The coalition will spread the message that the corporate tax increases on businesses would stall the economic recovery rather than fuel it, trickle down to the consumer and counteract the economic benefits of infrastructure spending.
For independent agencies that are pass-through entities, the president's budget does not call for any changes to the 20% tax deduction for small businesses, but some members of Congress have signaled they would like to see the deduction limited.
“Such changes would amount to a direct tax hike on America’s Main Street employers, a key reason why the tax plan released by the White House in March left the deduction fully intact,” the letter stated. “For these reasons, we support the Biden administration’s decision to leave the Section 199A deduction intact and we strongly oppose any attempt to cap or repeal it by Congress.”
The Big “I" remains vigilant and continues to strongly advocate against Congress making any negative changes to the small business pass-through deduction.