Rep. David Kustoff, R-Tenn., leaves a gathering of the House Republican Conference on the Capitol Hill Club, Sept. 9, 2025.
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Rep. David Kustoff, a Republican member of the House committee that writes tax coverage, launched a invoice Tuesday to decrease taxes on small companies in a bid so as to add tax coverage to the GOP Homeland Security funding effort.
The Tennessee lawmaker first shared the invoice with CNBC. It would enhance the certified enterprise earnings deduction for noncorporate enterprise house owners to 23%, up from the 20% that was adopted as a part of President Donald Trump’s 2017 overhaul of the U.S. tax code.
“This bill is good policy. It benefits small businesses across the country. It benefits family farms,” Kustoff, a member of the House Ways and Means Committee, mentioned in an interview with CNBC.
Kustoff’s proposal, which has six House GOP co-sponsors, was launched the identical day Senate Republicans launched legislative language kick-starting the method to fund a part of the Department of Homeland Security, which has been shut down since February.
Republican leaders are planning to make use of the funds reconciliation course of to fund the elements of DHS that Democrats have objected to in protest over what they think about overaggressive immigration enforcement insurance policies. Budget reconciliation is a procedural instrument used to move spending-related issues that requires a easy 50-vote majority within the Senate, versus the 60 votes usually required to beat a filibuster. It’s the identical course of Republicans utilized in 2025 to move their large tax and spending package deal often known as the “one big beautiful bill.”
That funds reconciliation decision launched Tuesday didn’t give directions to tax-writing committees within the House or Senate, however Kustoff mentioned there’s a risk for amendments to the invoice earlier than passage. And there may be speak about subsequent funds reconciliation payments earlier than the top of this Congress, which may present extra alternatives for Republicans to pursue tax and spending priorities that in any other case are unlikely to garner Democratic help.
“It’s moving in real time,” Kustoff mentioned, of the reconciliation course of. “And that’s a reason I thought, and my colleagues thought, that this bill should be filed now. There’s a possibility that we could get on the reconciliation train.”
The concept of a deduction for small companies itself was meant to stability out the tax cuts given to bigger companies as a part of the 2017 GOP tax invoice, Kustoff mentioned. The Tax Cuts and Jobs Act diminished the federal company earnings tax charge from 35% to 21%.
The 20% small-business deduction was made everlasting within the 2025 Republican tax and spending invoice.
But the proposal could possibly be costly. The Joint Committee on Taxation, a nonpartisan congressional panel that assists tax writers, estimated in December 2023 that the 20% deduction would cut back federal tax revenues by $57.6 billion in 2024 and $60.9 billion in 2025.
Still, Kustoff mentioned he’s optimistic there could possibly be broad Republican help, although if it have been included in reconciliation laws, proponents would wish to discover a “pay-for” — one thing to chop spending or enhance income — to offset to the fee.
“I make the argument, though, that the benefits, from a revenue standpoint, would offset the cost,” Kustoff mentioned.