Small Businesses at Risk From Cuts in House Republicans Tax Bill

Given the size and complexity of the House-passed tax and spending package, now heading to the Senate, many small business owners may have missed two serious risks that the legislation poses for them.

First, they could see their health insurance premiums skyrocket after this year because House Republicans chose not to extend expiring premium tax credit enhancements for people buying marketplace coverage.

Second, the bill’s massive cuts in health care and food assistance will leave lower-income people—who as consumers help support many small businesses—less able to buy anything but the bare essentials.

After 15 years of the Affordable Care Act, it’s now difficult to remember when having cancer, diabetes, or another pre-existing condition could prohibit someone from getting health insurance. Temporary enhancements in the premium tax credits for marketplace enrollees—one in four of whom are small-business owners or self-employed—have lowered premiums for nearly all enrollees, making health insurance more affordable.

Unfortunately, one of the only expiring tax provisions that House Republicans chose not to extend in their new bill is those tax credit enhancements. If the Senate doesn’t step in and extend them, 2.7 million small business owners—and their employees—will see their health insurance premiums rise sharply in 2026, according to Treasury Department figures.

Consider someone who owns a landscaping business, making about $125,000, while their spouse cares for their two young children at home. If the tax credit enhancements expire, their annual premiums will nearly double, jumping from $10,710 to $19,068. The premiums for a crew chief making $45,000, similarly with a spouse and two children, will go from $0 to $1,493.

Other changes in the House bill would make it harder for marketplace participants to enroll and stay enrolled, and increases their out-of-pocket costs. For example, technical adjustments to insurance payment formulas and standards would increase premiums and out-of-pocket maximums for most marketplace enrollees.

A shorter open enrollment period, coupled with more burdensome enrollment renewal and income verification requirements, will lead to fewer people with coverage.

The bill’s focus on people with low or moderate incomes will affect small businesses in ways that might be less obvious but are no less harmful, especially when combined with higher prices due to President Donald Trump’s tariffs.

For example, 17 million children in families that don’t receive the full child tax credit because their earnings are too low are completely excluded from the bill’s proposed expansion of the credit. The vast majority of these children are in working families—their parents do important but low-paying work as delivery drivers, home health aides, short-order cooks, and many more occupations.

The bill’s Medicaid and Supplemental Nutrition Assistance Program cuts would devastate low-income families. About 15 million people would lose their health insurance, and the SNAP cuts are so severe that some states could terminate their programs entirely.

These factors mean people with low or moderate incomes are going to be under tremendous financial pressure if this legislation passes and the Trump tariffs stay in place. The more they cut back on nonessential spending, the more trouble that means for small businesses that rely on them as customers.

The deep Medicaid cuts could reverberate through local economies in other ways. For example, these cuts could force some rural hospitals—often the largest employer in a town—to close, imperiling nearby small businesses.

It’s now the Senate’s turn to put its stamp on the House bill. It can choose to protect small businesses from skyrocketing health premiums and protect millions of families from losing health insurance and food security, with all of the individual family pain and broader economic risks those outcomes entail. Small businesses have a lot at stake in what the Senate decides to do.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Chuck Marr is vice president for federal tax policy at the Center on Budget and Policy Priorities, a Washington, D.C. think tank that promotes policies to reduce poverty and inequality.

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