The National Federation of Independent Business announced on April 15 that a new report details the economic benefits and significant tax savings for Hawaii’s 144,375 small businesses now that the 20% Small Business Tax Deduction has been made permanent. The organization also highlighted additional federal tax relief measures recently signed into law.
The topic is important because small businesses make up more than half of Hawaii’s private-sector workforce, according to the official website. The NFIB said the deduction could help create an estimated 4,000 new jobs annually over the next decade and boost Hawaii’s gross domestic product by $210 million per year during that period, with projections rising to $433 million annually after 2035.
Michael Iosua, state director for NFIB in Hawaii, said, “It’s important for policymakers in Honolulu to remember that more than 80% of small businesses are organized as pass-through entities for federal tax purposes and report their business earnings and expenses on their personal income tax forms. The 20% Small Business Tax Deduction has been a tremendous benefit, enabling Main Street entrepreneurs the ability to hire more workers, give raises to ones currently under their employ, purchase new equipment, and for some, the ability just to remain solvent. This is why it is so very vital the Hawaii Legislature pass and the governor sign House Bill 2329, which would conform the state’s tax code to the benefits offered in the federal deduction.”
Since its introduction in 2017, this deduction has allowed eligible businesses to deduct up to one-fifth of their income from taxes. Without congressional action last year, it was set to expire at the end of 2025. President Trump signed legislation making it permanent on July 4, 2025.
The NFIB maintains an office at 745 Fort Street Mall in Honolulu as part of its advocacy efforts across Hawaii according to its official website (official website). The group typically represents enterprises employing fewer than ten people with annual sales around $500,000 while providing education resources and policy tools (official website). Its work includes engaging with legislators about issues affecting local business owners (official website).
Founded in 1943 as a nonprofit association dedicated exclusively to supporting independent business owners nationwide—including those throughout Hawaii—the NFIB continues its mission today through advocacy initiatives such as this recent report (official website).
Looking ahead, Iosua said continued legislative alignment between state and federal policies will be essential for maintaining these gains.
