Ep. 85: Check Your 1040 for the Small Business Tax Deduction

Small business owners Bernie Williamson and Averre Marquis discuss how their small businesses make the most of the 20% Small Business Tax Deduction. This year, more than 33 million small businesses like theirs are able to reinvest more of their hard-earned dollars into their businesses and communities thanks to a 2025 federal tax law. NFIB Principal of Federal Government Relations, Dylan Rosnick, explains how to check your eligibility for the deduction and why small business owners’ stories need to be heard by lawmakers in Congress. 

Take Action: Create a 1-minute video for lawmakers to hear how you use the 20% Small Business Deduction. 

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Transcript

SPEAKER_00 0:00

I think the key words were leveling the playing field. If you're in this game, you know that you're going up against others. And the question is: do you have any anchors tied to your ankles while you're trying to swim?

SPEAKER_01 0:13

The Small Business Rundown is the official podcast of the National Federation of Independent Business, the member-driven voice of small business. Every two weeks, a new episode offers resources for small business owners and information on relevant laws and regulations. NFIB and our members advocate to keep U.S. small businesses strong and independent in Washington, D.C., all 50 states, and the nation's courts.

SPEAKER_02 0:41

This is a small business rundown. I'm Adam Temple, NFIB's Senior Vice President of Advocacy. It's tax season, and this year the 20% small business tax deduction is permanent, giving small business owners the certainty needed to create jobs and invest in their communities this year and beyond. In our conversation today, we'll hear from NFIB members Bernie Williamson and Avery Marcus about the small business deduction and how it's benefited each of their businesses, their employees, and their communities. I'm also joined by Dylan Rosnick of NFIB's Federal Government Relations team for insights on what we're hearing from lawmakers in Congress about how crucial the small business deduction is on Main Street. Thanks for joining us today. Thank you. Thanks for having me. Bernie, I'll start with you. Why don't you just give us a quick overview about your business and what you do?

SPEAKER_00 1:23

I represent North Star landscape design and installation. My husband is a landscape architect. My daughter is also a landscape architect. So it is a family business. We have been in business 27 years, started in our basement of our house and worked there for seven years, and then built our office here adjacent to our house. And we've been here ever since, raised our kids in the business, and now one of them is going to be taking it over. And we are, as it says, landscape design and installation.

SPEAKER_02 1:53

That's fantastic. Okay, so it's truly a family business. And you said you've been in business for several decades, but just looking back over the years since 2017 when the small business deduction was passed, what has that allowed you to do for your business and your employees?

SPEAKER_00 2:07

It changed the environment, the working environment and also the mental environment. If you've been in business, anyone who's been in business knows that when you're looking to grow, it's not just a matter of adding a person to your team. Especially in our business, if we add one, we have to add two because we need a crew, and then you need a truck, and then you need equipment, and then you need gear, and then you need material. So it's uh it's an exponential growth. And the decision to do that has to be done in an environment where you think you can sustain that going forward. So that deduction and knowing that we had that money instead of it going out available to us was huge. And and we actually did make some changes that took advantage of that, and and it has helped us to grow and also to do our jobs better, faster, more efficiently, and and even safer in some cases.

SPEAKER_02 3:00

Yeah, that's that's great. And and obviously it was not made permanent in the initial bill. It was last year, thankfully. How has that permanence affected your decision making and how you run the business?

SPEAKER_00 3:12

It opened the door again. As the deadline was approaching, we started to look to the future in terms of what do we do if we have to cut back? That's not a good way to do business. A better way to do business is to say what's next, what what do we want to do, what can we do, what's the future look like? And then that's a win for everyone. Our employees probably weren't quite aware of it, but when you're standing on the edge of this possible cutback, they didn't realize they might be in jeopardy, or our clients might not get the service that they needed as efficiently or as quickly. So it was a change that not only affected us, but affected others that weren't even probably aware of it.

SPEAKER_02 3:52

Yeah. And you mentioned awareness. Dylan, if a small business owner is not aware of whether or not they're eligible for the small business deduction, how can they find out?

SPEAKER_04 4:01

Absolutely. If if you've already filed your taxes, you can go look at line 13A. If not, if you are a pass-through business, so that's going to be a sole proprietor, an LLC, a partnership, or an S corporation, you're more than likely eligible for this deduction. You're more than likely eligible to have that 20% taken off your business income, your taxable income. And if you have a CPA, it's always worth talking to your CPA. Make sure you bring this small business deduction up, make sure that you're getting all of the benefits that you possibly can to lower your taxable income, to keep more money in your business rather than sending it to Washington, D.C. or state capitals.

SPEAKER_02 4:36

After a short break, we'll talk more about leveling the playing field between small businesses and their large corporate competitors.

SPEAKER_01 4:45

A new NFIB member ballot is open for all NFIB members to vote on key federal issues affecting small business. Issues include healthcare benefits, tax deductions, federal regulations, and more. Go to nfib.com slash vote now, where your vote guides NFIB's advocacy efforts and makes a difference for small businesses nationwide. Please take a few minutes to vote at nfib.com slash vote now.

SPEAKER_02 5:20

And we're back. From a competitive perspective, how does the small business deduction help you level the playing field with those competitors that might be bigger businesses?

SPEAKER_00 5:28

Really, I don't think we're afraid of competition. I think the key words were leveling the playing field. If you're in this game, you know that you're going up against others. And the question is, do you have any anchors tied to your ankles while you're trying to swim? And that was that was really the issue. The bigger, you know, producers, they have the advantage of quantity, but we have the advantage of quality and relationship and interaction and creating a working relationship with our clients that they can't because it would cost them too much over too many, you know, too large a scale. So we we serve a purpose and we have a function here. We're just asking for a you know a fair shot and um move the obstacles out of everybody's way. We're fine with that.

SPEAKER_02 6:17

Yeah, that's a good way to look at it. And had the deduction not been made permanent and you didn't have it for this year, while the the larger corporations had a permanent lower tax rate, how would that have changed your business operations or affected what you guys did?

SPEAKER_00 6:31

Well, we'd probably fall back on what we did during the last recession. We were small enough that we were able to retract a bit and and kind of bring our resources in and just take things down a notch and survive through it. But if this had been permanent, you can't do that forever.

SPEAKER_02 6:50

Yeah, exactly.

SPEAKER_00 6:51

We had a strategy we had that had been tested, unfortunately, in the past, and we survived that and came back and continued growing. But if that were permanent, that would be a different conversation.

SPEAKER_02 7:04

Absolutely. And with that in mind, what do you think lawmakers need to know about the importance of the small business deduction?

SPEAKER_00 7:10

I think we as business owners have to recognize that not all of our legislators have any business background. They don't know, and and whether that's their fault or not. I mean, they have other jobs, but but if you haven't run a business, you don't understand the minutiae and how the impact of even the smallest action on their part can ripple effect down the chain and knock your legs out from under you. Um, so it's really a matter of their willingness to be educated, and it's a matter of our willingness as small business owners to step up and tell them. If they don't know, they're not going to say, What don't I know? You have to raise questions, you have to educate them, you have to tell them what you need and why you need it. And if you you don't feel that you can do that alone, you band together with NFIB, for instance, with others of like mind who can say, listen, you need to understand this. And this is why this will work or why this won't work. Now please go do the job that we sent you there to do. Exactly.

SPEAKER_04 8:17

Absolutely. Bernie, you're absolutely right. There's a dwindling number of lawmakers in Washington, D.C. that are business owners, that have run the business, that have signed the front of a paycheck. And so your voice is absolutely powerful and rings true here in D.C. with lawmakers. And so thank you for stepping up and expressing your opinion and uh elevating the importance of this 20 percent small business deduction because it does make an impact in Washington, D.C., that's for sure.

SPEAKER_02 8:43

And Dylan, along those lines, I think it's fair to say that the deduction would not have been made permanent without the members that came to D.C. that submitted letters to their congressperson that made videos that you and your colleagues were able to share on the Hill. And fortunately, they took it to heart, they understood, as Bernie said, and made it permanent. How is NFIB now recognizing those champions that stepped up and voted to make the small business deduction permanent?

SPEAKER_04 9:09

You're absolutely right. This would not have been made permanent if it was not for small business owners screaming from the rooftop, saying that this is important, this is vital, we are going to be harmed if this goes away. And so our members, NFIB members, small businesses across the country have poured in stories, have made videos, have done written quotes, have met with their members of Congress, and Congress acted because of that. And so NFIB is is trying to recognize those members of Congress that stepped up and made this permanent. And we've handed out and took pictures with members of Congress with small business deduction champion pennants for those that stepped up and voted to make this permanent or co-sponsored the bill to give them a little momentum, a little physical thing that they can hang up in their office to say, look, I stood up for small businesses. We've also given them the ability to meet with small businesses back in their district on the importance of making the small business deduction permanent and hear firsthand from small business owners that are their their constituents on how they are using those tax savings that they would not have had without Congress stepping up. And we've hearing that their small businesses are hiring or giving raises and bonuses, increasing benefits, making capital investments, increasing investments back in their communities, everything that Bernie has already said. And then we're also trying to elevate our members' stories with their members of Congress to help them sell this massive win through videos and written stories we're posting on our social medias and helping members of Congress do the same to say we stood up for small businesses and we need to continue to stand up for small businesses.

SPEAKER_02 10:44

Yeah. And one of the reasons we're still talking about this some nine months after the bill was passed is because we want Congress to know don't touch this. This is not an area where you can go adjust this if anything, make it a larger deduction for small business owners. Trevor Burrus, Jr. Absolutely. So that's really important. What should small business owners who do want to make that point clear to lawmakers, what steps can they take to do that?

SPEAKER_04 11:06

Small businesses should and continue to stay vigilant on this. And permanent is only so permanent in Washington, D.C. An election can change everything, can change the entire landscape. So while it's not going to go away on its own like it was scheduled to, Congress can still act to get rid of the small business deduction. And so proactive defense is really the name of the game here. And so small businesses, we still need you to send in your stories and make your lawmakers aware that this is a thing and this is vital to your business. And so we have an action alert out there, our call to action, where you can take a video of yourself and explain your personal, in your own words, story of the small business deduction is permanent, and this is what it means to my business, and this is how I am using it. And that is so vital to this cause and to the defensive effort to make sure that this never goes away. And actually helps benefit members of Congress to know like maybe we should increase this, maybe we should provide small businesses a tax relief because this is so important and this can make those growth efforts elevated, would it boost those efforts that small businesses are already taking?

SPEAKER_02 12:13

Yeah, for sure. Bernie, it is the beginning of spring, which means you're even busier than you normally are. So we'll let you get back to it. But before we stop for today, is there anything else you'd like to add?

SPEAKER_00 12:24

Perhaps a suggestion. And actually, Dylan, you you punctuated it when you said that this deduction is not necessarily permanent. And I think that's because there's a perpetual pull back and forth. The tension is always there and there's always the moving left and right over the line. If we can remind our legislators that supporting a positive environment for business, large and small, is a win for everybody. So it's not a matter of taking from one and handing to another, it's a matter of everyone moving in the same direction. And I know that that's an unknown in DC, believe me. I've worked in DC for a little while. So I even got the sense of that. But when it comes down to the facts, this can be a feather in the cap of any legislator in any community. And the argument would be hard-pressed when everybody is in agreement that we're creating a positive environment and everybody's kind of getting a piece of the pie there. And we just need to really identify that and whittle it down and keep it in front of them so that when others come in and start whispering in ears about, well, there's a little money to be had there, there's also information and understanding that's saying, well, that's not the place we're going to find it. So that's my suggestion.

SPEAKER_02 13:45

Well, thank you for helping us make that point. We'll continue to do so. And we appreciate your time today, Bernie. Thank you very much. I also had the opportunity to speak with Minnesota small business owner Avery Marcus. Avery, thanks for joining us. Thank you. Thanks for having me. I'd like to start just by hearing a little bit about you and your small business. Can you tell us a little bit more about that? Sure.

SPEAKER_03 14:06

So I own a company called Asphalt Preservation. We work across four different states. Primarily, we contract with municipalities. We do um a process called chip sealing, which is a maintenance service for the asphalt, typically uh city streets, state highways, things like that, county roads.

SPEAKER_02 14:22

How long have you been in business? This is our 15th year. Okay, so you definitely know the difference since before the small business deduction and then after in 2017. So, in just thinking through that, how has the deduction allowed you to do more for your business or your employees?

SPEAKER_03 14:38

Well, it's a little bit embarrassing for me in that I saw all these great things happening, but didn't really piece it together until I was preparing to come out to, you know, for that thing in DC. And I actually asked my CPA to work up. You know, I had no idea what line number it was, any of that stuff. And he spit that out. And I'm like, oh, all the dots are connected now. As far as since that time, then I got me looking back and massive equipment upgrades, which which for traveling and being on the road like we do, not to mention uh a safety thing, you know, just making us more efficient, things like that. But then also we got to a point where we were able to start a profit sharing program that's been super popular with our employees and and has allowed us uh retention was always a big thing. We're we're seasonal in Minnesota. So the seasonality causes you most companies have a ton of turnover, and and we were that way until we started being able to offer some of these things that our competitors, as far as I know, aren't and our retention out of we had 35 at our peak last year, and I was looking for one person, you know, this year. So just huge, huge change for our company.

SPEAKER_02 15:42

That's outstanding. You know, obviously it would have expired at the end of last year had it not been made permanent last summer. How would that have impacted your business had it been allowed to expire by Congress?

SPEAKER_03 15:52

Well, yeah, instability would have been back and it would have been. Uh you got to really think twice before looking at at growth. You know, right now that's an area that we're moving into the next step, you know, after providing what we have is is looking at growth. So, you know, like any business, when you're when you're faced with uncertainty or increased costs, then then you're starting to pull back. So it's a lot of certainty going forward, which is it's so big to have that.

SPEAKER_02 16:17

Yeah. Avery, from a competitiveness standpoint, so the corporate rate, which was made permanent in 2017, how does the the small business deduction compared with that help you compete with those larger companies that may have the corporate rate?

SPEAKER_03 16:30

Well, so we we are kind of the small player on the block, so to speak, in in our world. Um, a lot of a lot of bigger ones. And I feel like where we were struggling, and being a startup business, you know, I didn't we didn't we didn't buy it. We we started up, you start with what you can afford to get going. And I I didn't come from a uh rich background or anything like that. So um you start with what you can afford and slowly work your way up. And it it's really allowed us to surge that equipment to get up to where we can compete productivity-wise. Uh, we're tackling much bigger contracts than we used to, and it's it's just been great all around.

SPEAKER_02 17:03

Yeah. And you mentioned that you've been to Washington, so you've talked to lawmakers about the importance of this. If you were talking one now, what would you say is the importance of the small business deduction that's now permanent?

SPEAKER_03 17:13

Well, just I would explain the impact it's had on on my business. And uh, I think I'm fairly typical, you know, with other business owners, um, in that uh it's just been such a shot in the arm to have all this extra capital where you can uh be a blessing to your employees, you know, and keep that retention, you can add uh to the to the safety, you know, aspect in in my particular line, you know, we're we're out on the highways, it's it's a dangerous environment. You need cutting edge equipment and and things like that. So I I would say, you know, thank you and uh let's let's keep going.

SPEAKER_02 17:44

Absolutely. And we have been thanking them as well for the those that stood up for small businesses on the issue. If another small business were to ask you what they could do to speak out on this issue, what would your advice to them be?

SPEAKER_03 17:55

Get involved in NFIB. I have a lot of local places, and now that that I've been more and more involved with it, I notice the plaques that they have up in their business. So I I've asked, and it's um a lot of people with a lot of good feedback just get involved, you know. So I would encourage them to make those calls, talk to your representatives, talk to your senators. That that stuff matters.

unknown 18:17

Absolutely.

SPEAKER_02 18:18

And Dylan, I Avery has has a great story to tell. We've passed that along to lawmakers. How do we here at NFIB use the stories like those of Avery's with lawmakers?

SPEAKER_04 18:28

Yeah, we use them all the time. We use them in a variety of different ways. And I think having those stories allows us to be creative and how we portray that to Congress and how we say, hey, this is really important to small businesses. On the small business deduction, it our stories, the stories from our members, are it allows us to show the real world impact of this deduction. And they can say, I have saved X amount of money, and this is how I have used that money to reinvest back into my business, back into my workers. We've also used them for little written quotes that we've used on social media, or like Avery did, film a video in your own words. This is how I've benefited, this is how my business is benefited, my workers have benefited. And then we can use that to show their member of Congress and also show the administration that this is very important and that this needs to stay. And maybe we even increase these kinds of provisions that allow more money to stay in businesses instead of coming to DC. We also offer up testimony to Congress. And so Congress will come to NFIB and say, we have a hearing on the small business deduction or tax. Can can you please provide a small business owner that has a good story that to tell and so we can learn more on real-world impacts of small businesses and small business tax. And so we are then able to provide small business owners to Congress that are willing to able to testify, fly out to DC, testify for a given committee and say their own story in person in front of members of Congress and really elevate those stories so uh they are heard.

SPEAKER_02 20:00

All because small business owners are willing to take the time away from their business to to do those things.

SPEAKER_04 20:05

Absolutely, to get involved and and uh to really be a voice for themselves and for other small business owners. And it it all helps NFIB advocate for small businesses and for our members.

SPEAKER_02 20:15

And with that in mind, Avery, we want to thank you for your involvement. And before we let you get back to running your business, is there anything else you'd like to add that maybe we left out?

SPEAKER_03 20:23

Just uh again, a thank you, you know, if any of any of them that had a a part in it, you know, and also thank you to NFIB for giving us a platform uh for the for the business owners, you know, it's it's great.

SPEAKER_02 20:33

We couldn't do it without you, so thank you. Take care. Small businesses truly are the foundation of our economy, and this huge victory was made possible by tens of thousands of small business owners emailing, calling, and meeting with their U.S. representatives and senators to discuss the impact of the massive tax hike that would have taken place if this deduction was not made permanent. Building on what today's guest said, if you're a small business owner, please consider telling your member of Congress what this historic achievement means to you as you create jobs, grow your business, invest in your communities, and whatever else. Today's show notes include a link to easily take care of that with just a few minutes of your time.

SPEAKER_01 21:08

Thanks for joining us for this week's episode of the Small Business Rundown. Your continued support helps us amplify the issues that matter most. If you liked this episode, please help small business owners find the podcast by giving it a rating, like, or review. You can find us at nfib.com and on YouTube, X, LinkedIn, Instagram, and Facebook.