The National Federation of Independent Business (NFIB), a prominent advocate for small businesses, issued a report on the potential impacts of the 20% Small Business Tax Deduction in Hawaii on April 15, 2025. The report details the benefits of making this deduction permanent and warns of the consequences if it expires.
Over 139,000 small businesses in Hawaii stand to gain from the deduction, yet face higher taxes should Congress fail to make it permanent this year. The recommendations highlight severe economic repercussions for small companies in Hawaii and on a national scale, pointing to potential slowdowns and additional financial burdens on local businesses.
The report underlines the disparity in tax rates between small businesses and larger corporations if the deduction lapses. While C-Corporations in Hawaii would continue to pay a 27.4% tax rate, small businesses could see their rate rise to 50.6%.
Retaining the deduction could level the playing field, with anticipated economic benefits including the creation of 4,000 new jobs annually over the next decade in Hawaii. The GDP could see an increase of $210 million initially and reach $433 million per year after 2035.
Michael Iosua, NFIB Hawaii State Director, expressed concerns: “Small businesses don’t just create jobs—they create opportunity, innovation, and strong local economies. If Congress allows the 20% Small Business Deduction to expire, a massive tax hike on small businesses will take effect, stifling growth, putting the brakes on hiring, and endangering countless small businesses. With the deduction set to expire this year, lawmakers must act quickly to protect small businesses and the communities they support.”
The 20% deduction, a significant part of the Tax Cuts and Jobs Act of 2017, has facilitated growth for millions of small business owners, enabling expansions, new hiring, and wage increases. Should Congress not extend it permanently, most small businesses face increased taxes, potentially jeopardizing jobs and economic stability across the country.
For further updates, the NFIB encourages following their latest small-business news and resources for Hawaii.
For over eight decades, NFIB has represented America’s small and independent business owners on both national and state levels. For additional information, they invite interested parties to visit their website.
