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Wisconsin Watch partners with Gigafact to produce fact briefs — bite-sized fact checks of trending claims. Read our methodology to learn how we check claims.


While individual tax cuts from the 2017 Tax Cuts and Jobs Act are set to expire after 2025, 95% of business owners will not “automatically” experience a tax hike, because many businesses have no taxable income.

TCJA’s corporate tax cuts are permanent. However, most American businesses “pass through” their tax liability to their individual owners. In 2015, 95% of businesses, representing 63% of business income, were pass-through, according to EconoFact.

Pass-through business income would be taxed at a higher rate if TCJA’s individual tax cuts and 20% pass-through income deduction are allowed to expire.

In this scenario, pass-through businesses that turn a profit would see their taxes increase. But tax expert Matt Gardner points out that “many, many businesses each year don’t turn a profit” and therefore “have no taxable income to pass through.”

Less than two-thirds of small businesses were profitable in 2022, according to the Chamber of Commerce.

This Fact Brief is responsive to conversations such as this one.


Investopedia Explaining the Trump Tax Reform Plan

EconoFact The Other 95%: Taxes on Pass-Through Businesses

Investopedia How the TCJA Tax Law Affects Your Personal Finances

DocHub ITEP Matt Gardner Response

Chamber of Commerce Small Business Statistics

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Erin Gretzinger / Wisconsin WatchReporting Intern

Erin Gretzinger joined Wisconsin Watch as a reporting intern in May 2022. She is a journalism and French major at UW-Madison and will graduate in spring 2023. Erin previously worked for the Wisconsin State Journal as a reporting intern and served as the 2021-22 editor-in-chief at The Badger Herald. She is a recipient of the Jon Wolman Scholarship, the Sigrid Schultz Scholarship and the Joseph Sicherman Award Fund for her academic and reporting work.