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Patrick Connor, Washington state director for the National Federation of Independent Business, views the NFIB Small Business Optimism Index staying steady in June — a slight decrease of 0.2 points to 98.6 — as a positive sign for small business owners in the Evergreen State.
This is mainly because the 2017 Small Business Tax Deduction was made permanent in the One Big Beautiful Bill Act, signed into law by President Donald Trump on July 4. The deduction allows eligible owners of certain pass-through businesses to deduct up to 20% of their qualified business income. It was part of the Tax Cuts and Jobs Act of 2017, passed by Congress during Trump’s first term.
“Now that the Small Business Deduction has been made permanent and will not expire at the end of the year, that should improve the outlook for Main Street entrepreneurs in future Optimism Index readings,” Connor said in a news release. “Permanency also provides a badly needed counterbalance to all the tax increases the Washington Legislature just imposed.”
This session, the Washington State Legislature approved a significant package of tax increases. The new taxes and fees are estimated to raise between $9.4 billion and $12.5 billion over the next four years. The package includes increases to capital gains taxes, estate taxes and sales taxes on various business services.
Majority party Democrats defended the increased taxes, arguing they are necessary to fund essential public services, particularly education and to address wealth inequality.
Republicans have been critical, claiming the tax hikes will disproportionately impact businesses, working families and those with lower incomes, and will contribute to rising living costs.
The small dip in the NFIB Small Business Optimism Index suggests that overall optimism among small business owners is holding steady.
The 98.6 figure is just below the forecast of 98.7 but still above the 51-year average of 98. The index remained stable overall, although a notable increase in small business owners reporting excess inventories contributed to the slight dip, according to NFIB.
Taxes remain a significant concern for small businesses, with 19% of owners citing them as their single most important problem.
“Small business optimism remained steady in June while uncertainty fell,” NFIB Chief Economist Bill Dunkelberg said in a news release. “Taxes remain the top issue on Main Street, but many others are still concerned about labor quality and high labor costs.”