The National Small Business Association (NSBA) recently published its 2025 Small Business Taxation Survey, shedding light on the significant challenges small businesses encounter due to federal tax regulations. The report raises alarms about the impending expiration of the 2017 Tax Cuts and Jobs Act, which poses a potential threat of substantial tax increases for many small enterprises.
Notably, the survey reveals that 83% of small businesses operate as pass-through entities, where business taxes are paid at the personal income level. This tax structure heightens their vulnerability to impending tax hikes if Congress opts not to extend expiring tax cuts.
Key findings from the survey include:
- On average, small business owners spend over 20 hours per year on federal tax compliance, even with the assistance of tax professionals.
- A staggering 90% of small businesses indicate that federal taxes affect their everyday operations, with one-third reporting a considerable impact.
- Over half of small business owners find it challenging to obtain necessary information directly from the IRS.
- Tax administration complexity—rather than financial cost—is viewed as the most significant burden among small business owners.
- For those small businesses involved in international trade, China remains the primary source of imported goods.
The NSBA has consistently alerted policymakers about the disruptions stemming from expiring tax laws, highlighting how these uncertainties impose extra burdens on small businesses. The potential expiration of crucial tax provisions, including the 199A Qualified Business Income Deduction, continues to be a major concern.
As small business advocates intensify their calls for Congress to ensure tax stability and long-term relief, the survey findings underscore the urgency of addressing these issues. NSBA Board Chair Michael Canty emphasized the necessity for predictable tax policies that safeguard small businesses from disproportionate impacts compared to their larger counterparts.
“As Congress navigates tax extender or reform discussions, it is essential that small businesses are provided with tax stability, predictability, and permanency, ensuring fairness with larger businesses,” Canty remarked.
