The Trump administration’s plan to rewrite federal tax policy has facedin New Jersey, due to the proposed elimination of a key tax deduction that helps offset local property taxes. But now advocates for small-business owners are also questioning Trump’s proposals, saying they could end up hurting many of the state’s mom-and-pop stores.
Trump has beento overhaul the federal tax code as a boost for the middle class and small businesses. A key change relating to small-business owners is a proposal to create a new tax rate for so-called pass-through businesses, which is a category that many small businesses fall under.
The owners of a pass-through business don’t pay corporate taxes, but instead are taxed under the individual or personal-income tax rates. Right now, small-business owners can face federal personal-income tax rates as high as 39.6 percent, but Trump is seeking to create a pass-through rate that would be set at 25 percent.