Congressman David Kustoff Introduces the Small Business Tax Cut Act to Support Main Street

WASHINGTON - Congressman David Kustoff (TN-08) introduced the Small Business Tax Cut Act (H.R. 8415). This legislation lowers taxes for millions of small businesses, farmers, and independent professionals by expanding the qualified business income deduction, also known as Section 199A. Reps. Greg Steube (FL-17), Claudia Tenney (NY-24), Mike Carey (OH-15), Carol Miller (WV-1), Michelle Fischbach (MN-07), and Blake Moore (UT-01) are original cosponsors.

"The Small Business Tax Cut Act sends a clear signal that Congress is serious about keeping Main Street competitive," said Congressman David Kustoff. "Small businesses and family farms are central to West Tennessee's economy. By expanding the 199A deduction to 23 percent, we are giving local business owners the flexibility to hire more workers and invest in their operations."

"I am proud to cosponsor the Small Business Tax Cut Act, which raises the section 199A deduction to 23 percent. By increasing the deduction, this bill directly supports small businesses and family farms in Western Minnesota by helping them secure the funds they need to hire more workers, increase wages, and upgrade their equipment. The Small Business Tax Cut helps keep our rural economies strong, so local employers can put their earnings back into their businesses and communities," said Congresswoman Michelle Fischbach.

"West Virginia is built on the hard work of small businesses, manufacturers, and independent professionals who form the backbone of our communities. This is why this bill is so important. It keeps the focus on Main Street and ensures that our local job creators are not left behind. By strengthening and modernizing the small business deduction, this legislation gives entrepreneurs greater certainty and the ability to reinvest in their businesses so they can continue to serve their customers" said Congresswoman Carol Miller.

"Small businesses are the backbone of our economy, and the 199A Qualified Business Income Deduction has been one of the most successful tax policies to support them. I'm excited to introduce the Small Business Tax Cut Act to increase the deduction from 20% to 23% to allow Utah's small businesses, farmers, and manufacturers to reinvest more of their income into their business. This will support new jobs and keep Utah's economy thriving," said Congressman Blake Moore.

"Upstate New York's economy runs through Main Street," said Congresswoman Claudia Tenney."The Small Business Tax Cut Act builds on the success of the 199A deduction by allowing small businesses to keep more of what they earn, invest in their workers, and plan for the future with certainty. By strengthening and expanding this deduction, we are giving Main Street businesses, family farms, and local employers the tools they need to grow, compete, and continue driving economic growth across Upstate New York and the nation."

The Small Business Tax Cut Act includes reforms to enhance the QBI deduction and expand eligibility to more small businesses:

• Raises the pass-through deduction rate from 20 to 23 percent so sole proprietors, partnerships, S-corporations, farms, and family-owned businesses can keep more of what they earn to reinvest in operations;
• Modernizes the income thresholds and phaseouts to create a smoother, more predictable structure as businesses grow, replacing the sharp "benefit cliff" many face under current law;
• Fixes the treatment of "specified service trades or businesses" (SSTBs)-including professions such as doctors, accountants, and consultants-so more local professionals can continue to benefit from the deduction as income rises;
• Extends the deduction to qualifying interest dividends from business development companies (BDCs), which specialize in providing growth capital to small and midsize businesses that cannot access public markets or large-bank financing;
• Updates the inflation rules, including moving the base year from 2018 to 2025, so the small business deduction keeps pace with today's costs.

More than 90 percent of U.S. businesses are structured as pass-through entities, making the Section 199A deduction a central component of tax relief for Main Street employers. The bill has earned support from small business and agriculture leaders:

"SBE Council is pleased to endorse the 'Small Business Tax Cut Act,'" said Karen Kerrigan, President and CEO of the Small Business & Entrepreneurship Council. "Small business owners continue to face various cost and competitive pressures. In SBE Council's most recent 'Check Up' survey, 61% of small business owners reported positive cash-flow effects in 2025 from the 'Working Families Tax Cuts Act,' with the 20% small business deduction and lower personal tax rates cited as the most beneficial provisions contributing to improved financial performance. Strengthening the deduction will provide vital capital to help them navigate such pressures, and continue to invest and grow."

"Since 2017, the Small Business Tax Deduction has been vital for small businesses to remain competitive and grow their businesses," said Dylan Rosnick, Principal of Federal Government Relations at the National Federation of Independent Business. "Congress saw these benefits and made the 20% Small Business Tax Deduction permanent through the Working Families Tax Cuts. Rep. Kustoff's Small Business Tax Cut Act builds on this success and would provide 9 in 10 small businesses with tax cuts. The legislation would also expand the Small Business Tax Deduction to small businesses who are prevented from utilizing the deduction."

"Tennessee Farm Bureau would like to thank Congressman Kustoff for introducing the Small Business Tax Cut Act," said Kevin Hensley, Director of Public Policy for the Tennessee Farm Bureau Federation. "Increasing the qualified business income (QBI) deduction would allow Tennessee farmers to keep more of their hard-earned income and invest in their operations."

"On behalf of the S Corporation Association, I write to express our strong support for the Small Business Tax Cut Act," said Brian Reardon, President of the S Corporation Association. "Pass-through businesses are the backbone of the American economy and S corporations are the backbone of the pass-through community. Raising the deduction to 23 percent would improve competitiveness for Main Street businesses by narrowing the effective tax-rate gap with larger C corporations. It would increase the after-tax cash flow of these businesses, allowing greater reinvestment in hiring, capital improvements, and business expansion."

"The National Association of Home Builders commends Rep. Kustoff for introducing the Small Business Tax Cuts Act, legislation that would ease the tax burden for small businesses and many home building firms by increasing the Section 199A qualified business income deduction to 23 percent," said Bill

Owens, Chairman of the National Association of Home Builders. "This measure will help address the nation's housing affordability crisis by enabling builders to invest more resources into multifamily rental construction, land development, and in building more single-family homes."

"The Mortgage Bankers Association supports the Small Business Tax Cut Act, legislation that provides meaningful tax relief to America's small businesses, including independent mortgage lenders, community banks, and mortgage brokers," said Bill Killmer, SVP of Legislative and Political Affairs at the Mortgage Bankers Association. "By strengthening the Section 199A deduction, this bill helps ensure small businesses continue to invest in their employees, technology, and local communities. At a time when housing affordability and access to credit remain critical challenges, this targeted tax relief will enhance the stability and competitiveness of small and mid-sized mortgage businesses that serve borrowers in every market."

Rep. Kustoff continues to focus on policies that support small businesses and strengthen domestic production. He will continue working to advance these provisions as Congress moves into the next round of reconciliation.

These provisions were included in the House-passed version of the One Big Beautiful Bill and remain part of ongoing efforts to strengthen the small business deduction.

Read the full bill text here.

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