The National Small Business Association (NSBA) released its 2025 Small Business Taxation Survey, highlighting the challenges small businesses face due to federal tax laws. The report underscores concerns about the expiration of the 2017 Tax Cuts and Jobs Act, which many small businesses fear will result in significant tax increases.
According to the survey, 83% of small businesses are structured as pass-through entities, meaning they pay business taxes at the personal income level. This structure makes them particularly vulnerable to potential tax hikes if Congress does not extend expiring tax cuts.
Other major findings include:
- More than 20 hours per year are spent dealing with federal tax compliance by most small-business owners, even though many hire external tax professionals.
- 90% of small businesses report that federal taxes impact their day-to-day operations, with one in three citing a significant impact.
- More than half of small-business owners say accessing needed information directly from the IRS is difficult.
- Tax administration and complexity—rather than financial cost—is cited as the largest burden.
- Among small businesses that outsource goods internationally, China is the most common country they purchase from.
NSBA has long warned policymakers about the disruptions caused by sunsetting tax laws, emphasizing how these uncertainties place additional burdens on small businesses. The expiration of key tax provisions, including the 199A Qualified Business Income Deduction, remains a top concern.
“Given that the majority of small-business owners pay business taxes at the personal income level—83 percent are pass-through entities—it’s no wonder small businesses are very concerned about potential and significant tax hikes if Congress fails to address the expiring tax cuts,” stated NSBA President and CEO Todd McCracken.
The survey results come as small-business advocates urge Congress to prioritize tax stability and long-term relief. NSBA Board Chair Michael Canty, of Alloy Precision Technologies, emphasized the need for predictable tax policies that ensure small businesses are not disproportionately affected.
“As Congress embarks on any tax extender or tax reform discussion, it is imperative that small businesses are afforded tax stability, predictability, and permanency, not to mention parity with larger businesses,” Canty stated.