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May 08.2025
3 Minutes Read

Why Small Businesses Are More Concerned About Tax Policies Than Tariffs

U.S. Capitol with skyscraper overlay, symbolizing tax policy focus.

Tax Policies vs. Tariffs: The Concern of Small Businesses

In the fluctuating landscape of the U.S. economy, small businesses are feeling the weight of both tax policies and tariffs. Recent findings from the WSJ/Vistage Small Business CEO Confidence Index survey indicate that a staggering 72% of small business leaders are bracing for negative effects due to shifting tariff and trade policies. However, a growing worry is surfacing among these businesses regarding tax policies, which previously had promised optimism but are now causing unease.

Understanding the Shifting Landscape of Tax Policies

While 66% of small businesses held positive expectations about the new administration’s tax policies back in December, that confidence has plummeted to just 27% by April. This decline consecutively mirrors the delay in the administration’s approach to reinstating the favorable tax policies birthed under the Tax Cuts and Jobs Act (TCJA) of 2017. Businesses had anticipated swift actions to restore these beneficial provisions to support their growth.

The Critical Benefits of the Tax Cuts and Jobs Act

The TCJA brought substantial changes, catalyzing economic growth by offering significant tax breaks aimed primarily at enhancing investment opportunities for small enterprises. Among the pivotal tax benefits were:

  • The introduction of a 20% Qualified Business Income (QBI) deduction for pass-through entities, easing tax burdens for numerous business owners.
  • A reduction of the corporate tax rate from 35% to 21%, making incorporation a more attractive option for many entrepreneurs.
  • Expanded Section 179 expensing options and full bonus depreciation for property and equipment, enabling immediate deductions that enhance cash flow.
  • A doubling of the estate tax exemption aimed at supporting family-owned businesses with succession planning.
  • The retention of cash accounting methods for a broader array of small businesses, simplifying their financial reporting.

However, with the impending expiration of TCJA provisions, small businesses are anticipating significant limitations on their ability to reinvest, a crucial factor for driving community growth and sustaining the American economy.

Addressing the Impacts of Tariffs and Trade Policies

As small businesses voice their concerns about the increasing tax burden alongside the pressures of tariffs, Tom Sullivan, senior vice president of small business policy at the U.S. Chamber of Commerce, emphasizes the importance of addressing these dual challenges. The chamber is spearheading advocacy efforts to underscore the detrimental effects of tariffs and is pressing for relief measures.

“We need to provide immediate relief from the tariffs; they are stifling small businesses,” Sullivan asserts. The chamber’s proposals include exemption processes for small businesses affected by significant employment impacts due to tariffs, fostering a more supportive regulatory environment.

Looking Ahead: Navigating Challenges and Uncertainties

The uncertainty surrounding tax policies and tariffs isn’t just a business issue; it's a community concern. Sullivan urges CEOs to communicate these challenges to congressional representatives, highlighting their potential to impact local economies profoundly.

Making the case for permanent provisions in tax law designed to enhance the operational capabilities of small businesses is more critical than ever. As economic conditions evolve, retaining favorable tax policies is essential for maintaining levels of investment, innovation, and job creation.

In conclusion, small business leaders face a tumultuous journey ahead with intertwined challenges of tax adjustments and tariff implications. To advocate effectively for their interests, they must engage proactively with policymakers. Addressing these issues head-on not only promotes their growth but also secures a robust backbone for local and national economies alike.

Take Action for Future Stability

Now more than ever, small business owners must rally together, conveying their collective experiences and concerns to ensure their voices echo in policy decisions affecting them. Monitoring developments in this arena will empower business leaders to make informed choices.

Economic Trends

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06.28.2026

Small Business Confidence Surges: Navigating Wage Hurdles Ahead

Update Understanding the Current Surge in Small Business Confidence As we navigate the intricacies of 2025's economic landscape, one trend emerges more vividly than the others: small business confidence is on the rise. According to the recently released MetLife and U.S. Chamber of Commerce Small Business Index, this upward trajectory reflects the resilience and optimism within the small business community, even as challenges loom large. The Numbers Speak Volumes The latest index results reveal that the small business confidence score has climbed to a record high of 72.0, a significant increase from 65.2 just a quarter ago. This optimism stems from improved perceptions of both national and local economies, which buoy business owners' hopes for better cash flow and economic stability. Interestingly, about 31% of business owners now feel very comfortable with their cash flow—a rise from 23% in the previous quarter. This comfort can drive further investments and growth, igniting a cycle of expansion that feeds back into the economy. Inflation: The Cloud Over the Horizon Despite the optimism, there’s a shadow cast by rising costs and inflation. Over 46% of small business owners cite inflation as their number one concern, and a staggering 75% say they've been significantly affected by price increases over the past year. According to Tom Sullivan, Vice President of Small Business Policy at the U.S. Chamber of Commerce, “high costs are holding many back from expanding and investing.” This sentiment echoes through the small business community, where 34% of owners say the costs of goods and services hinder their growth. The general consensus is that while the winds blow steadily for the business community, confronting inflation could prove to be an ongoing battle. Investing in People: A Strategic Imperative With inflation creating pressure, one area where there has been a marked change is in talent acquisition. This quarter, 14% of small business owners identified attracting talent as a top concern, an increase from 6% in the previous survey. Here lies an opportunity; investing in employees through training, benefits packages, and personalized communications can create a more stable and resilient workforce that’s less susceptible to the fluctuations of the market. Bradd Chignoli, an executive VP at MetLife, emphasized that effective response practices will not only combat challenges but can transform them into strategies for longevity and stability. Navigating Growth Priorities Amid Cost Pressures Small business owners are making strategic investments in various growth areas, insightfully prioritizing marketing, customer experience, and technology. The focus on technology is particularly notable; from business software to AI and data management, approximately 60% of small businesses are investing in tech to enhance operations. Younger business owners, in particular, are leaning toward improving online customer experiences as a route to ensure sustainability. What Lies Ahead for Small Businesses? The outlook for small businesses remains cautiously optimistic. While economic pressures persist, the growth in confidence suggests that many SMEs are prepared to confront these hurdles head-on. Increased investment in human capital and technology could very well serve as the catalysts that propel them forward, transforming challenges into opportunities for growth. In summary, small businesses are not just surviving; they are proactively seeking avenues for expansion and improvement. The resilience they demonstrate is key to fostering a robust economy, one where challenges like inflation and rising costs can be tackled through innovation and strategic planning.
06.27.2026

Small Business Confidence Keeps Climbing Despite Wage Hurdles

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Why Investing in Small and Midsize Businesses Strengthens Our Economy

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