The Senate Finance Committee released its version of the Big Beautiful Bill on Monday, and it includes major victories for American Main Street. Combining the best aspects of this bill with those from the House version that passed last month will empower small businesses to usher in America’s next Golden Age.
Like its House counterpart, the Senate bill makes the Tax Cuts and Jobs Act (TCJA) permanent, locking in lower individual tax rates for families and the 95 percent of small businesses structured as pass-throughs. Permanence prevents $4 trillion in devastating tax hikes scheduled to take effect next year if Congress doesn’t act. It gives small businesses the ability to invest, hire, and plan with confidence.
The best parts of the Senate bill are its provisions to restore and make permanent immediate expensing for equipment and research and development. In these respects, the bill goes further than its House counterpart, which merely extends these write-offs for five years.
Immediate expensing allows businesses to deduct the full cost of equipment, machinery, and technology upgrades in the year they’re purchased—rather than spreading those costs over several years. For capital-intensive industries like construction, manufacturing, and trucking, that means significantly lower tax bills and faster growth. The local bakery can upgrade ovens, or the neighborhood landscaper can replace its outdated (and deafening) leaf blowers without waiting years for a tax benefit.
Due to the short-lived immediate expensing after the original TCJA, HM Manufacturing in Illinois purchased $750,000 in new cutting-edge equipment (and hired new employees at boosted wages to manage it). Guy Chemical, a manufacturer in Pennsylvania, describes immediate expensing as “a game-changer” and was able to build a new laboratory, invest in new chemical compounding equipment, and purchase updated packaging lines.
Restoring full deductions for research and development expenses means small innovators no longer have to amortize R&D costs over five years. This will help startups, small manufacturers, and biotech firms that depend on innovation but lack the resources of larger corporations. It ensures tomorrow’s breakthroughs don’t just come from Silicon Valley but from garage inventors, biotech labs, and hometown engineers.
The bill has many other good provisions for small businesses and families. It expands Democrats’ burdensome $600 reporting threshold for those with side hustles to $20,000. It increases the standard deduction and child tax credit. And it exempts tips and overtime from taxes (up to certain limits). Seniors also get a new $6,000 deduction.
Unfortunately, one key piece missing from the Senate bill is the House expansion of the small business deduction from 20 percent to 23 percent, which Job Creators Network (JCN) has long been the loudest voice calling for. Approximately 26 million small businesses rely on this deduction and would be helped by its expansion.
The Senate bill also limits state business income tax deduction benefits, giving corporations an unfair advantage because they can fully write these off. This imbalance needs to be addressed in the final legislation in order to maintain parity between these tax structures.
The Senate should make these quick fixes and pass its landmark legislation making the TCJA permanent as soon as possible.
JCN polling finds that 70 percent of small businesses plan to hire, expand, raise wages, and reinvest in their communities if the TCJA is made permanent. Adopting the immediate expensing permanence from the Senate and the expanded 23 percent deduction from the House in the final bill that goes to President Donald Trump’s desk will further boost the share of businesses planning to expand.
Combined with President Trump’s low inflation and deregulation, the Republican tax cut bill can boost real economic growth, household incomes, and living standards to modern American records.
Alfredo Ortiz is CEO of Job Creators Network, author of “The Real Race Revolutionaries,” and co-host of the Main Street Matters podcast.
