Op-Ed: Rep. Kevin Hern and Matt Haller: This Tax Day, Congress can offer tax relief for small businesses

The April 15 tax deadline is never a fun day for small business owners, but this year, the date collides with ongoing global economic uncertainty. Entrepreneurs crave predictability, and while the macro situation remains fluid, there is one thing Congress can do right now to provide stability: extend the 2017 Tax Cuts and Jobs Act (TCJA).

Passed during President Donald Trump’s first term, the TCJA contains a full slate of provisions that have provided widespread and sweeping benefits, especially for small business owners in the franchise community.

Franchising is deeply personal for both of us. Before public service, one of us sold a hog farm to buy a McDonald’s restaurant, starting an entrepreneurial journey that led to owning 24 restaurants throughout the Tulsa area. One of us runs the International Franchise Association (IFA), the world’s oldest and official organization for franchising, which is responsible for nearly 9 million jobs in this country.

We both know how small businesses have been impacted by politicians and bureaucrats who have never run a business themselves. In 2017, the Tax Cuts and Jobs Act (TCJA) revolutionized the system, giving small businesses, including franchises, the lifeline they desperately needed.

Every major corporation — Facebook, Google, Microsoft, etc. — started as a small business in someone’s garage or dorm room. McDonald’s, now one of the largest and most recognized brands in the world, started with just one location in California. These success stories are because of the opportunity that exists in the United States of America. Someone can take a good idea, apply a little elbow grease, and create a business.

Franchising gives that same opportunity to aspiring entrepreneurs. You take the same risk as the small business down the street, you have the same opportunity for success or failure. We know better than anyone how the franchise model of small business has helped countless Americans realize the American Dream.

In recent decades, the government has encroached further and further into small businesses’ operations, levying unfair taxes and burdensome regulations.

Thankfully, President Donald Trump’s tax cuts helped level the playing field for small businesses with a deduction known as 199A. The provision empowered owners of pass-through businesses to deduct up to 20 percent of their qualified business income from their taxable income.

More than 95 percent of franchise businesses are organized as pass-throughs that directly benefit from the 199A deduction. It has enabled franchisees to increase investment in their business, which drives growth and innovation. Meanwhile, the extra financial breathing room enabled the hiring of more employees and provided better benefits to existing team members.

Without action by Congress, this tax break for small businesses will vanish in 2026.

TCJA also allowed businesses to immediately write off 100 percent of the cost of capital investments in qualified property. For businesses with narrow profit margins, the influx of cash flow is crucial for reinvestment, remodeling and expansion, and managing operational costs.

Also known as bonus depreciation, this provision has already begun to phase out. It stands at 40 percent for this year and will vanish entirely in 2027 unless Congress acts.

Unlike government, businesses must plan for the future right now. They don’t have the luxury of waiting to see what lies ahead. If those tax benefits are at risk of being reduced, entrepreneurs will often respond by trimming their sails on their future planning, which can lead to unpleasant downstream effects.

Many politicians talk a big game about support for small businesses, often referring to them as the “backbone of the economy.” The sentiment is correct, but now is the time to put those words into action and re-authorize the 2017 tax cuts.

The relief provided by TCJA has been a lifeline for many, so the prospect of a major tax hike at the beginning of the year would be like pulling a rug out from under them — and not for big businesses on Wall Street, but the small businesses on Main Street.

On this Tax Day, the best thing Congress can do is act now. Don’t wait for the end of the year. Small businesses, the franchise community and the broader economy are depending on it.

Representing Oklahoma’s 1st District since 2018, Kevin Hern is Chairman of the Republican Policy Committee and Co-Chairman of the Small Business and Franchise Caucus. Matt Haller is the President and CEO of the International Franchise Association