Representative Angie Craig Introduces Legislation to Lower Tax Burdens for Self-Employed Small Business Owners

Press Release

Today, U.S. Representative Angie Craig introduced the Small Business Owner Tax Relief Act, which would reduce the tax burden on self-employed individuals, who make up the majority of small business owners in Minnesota and across the country

"Small businesses are the economic engine of this great state, making up more than 90 percent of employers in the Second Congressional District alone. It's long past-time that we re-centered our economy -- and our tax code -- around these hardworking folks who contribute so much to our local communities," said Representative Craig. "I'm proud to lead this important effort, which would not only provide long-overdue tax cuts to small business owners, but also reduce the American budget deficit."

According to the Small Business Administration, more than 80 percent of small businesses in the United States have no additional employees besides ownership. Current law requires these "self-employed workers' to pay the full employee and employer payroll tax portions themselves -- while allowing them to deduct half of these taxes as an above-the-line deduction on their federal tax returns. Craig's legislation would permanently increase the current deduction to 75 percent for individuals making less than $400,000 annually, providing a tax cut for most small business owners.

For example, while individual tax situations vary, a Minnesota small business owner earning $100,000 in self-employment income would see their above-the-line self-employment deduction amount increase by approximately $3,533 under Craig's bill. For a non-itemizing, single filer taking the standard deduction, this would result in an income tax savings of more than $775 over current law for the small business owner using the latest 2022 tax brackets.

The cost of these tax cuts would be fully paid for -- and reduce the deficit by an estimated $500 million -- by implementing a 0.8% excise tax on stock buybacks from publicly traded corporations.

In Congress, Craig has long advocated for small businesses in Minnesota and across the country, which have accounted for more than 60% of net job creation over the past 25 years and represent more than 90% of employers in Minnesota's Second District. Earlier this year, Craig introduced the Small Business Tax Relief Act, which would cut the corporate tax rate from 21% to 18% for the first $400,000 of income for businesses earning less than $5 million per year. Last summer, Craig led more than 100 of her colleagues from both parties in pressing House leadership to replenish the Restaurant Revitalization Fund (RRF) program, which was designed to support the hardest hit restaurants, bars and eateries. Craig also invited Small Business Administrator Isabelle Guzman to Minnesota's Second Congressional District to meet with local small business owners and discuss how the federal government could best support their recovery. And in April, the House passed Craig's bipartisan SCORE for Small Business Act, a bill to reauthorize and improve training and support programs for beginning entrepreneurs.

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