However, the tax bill could be harmful for small business. Some entrepreneurs say the bill doesn't do enough to help lower their tax burden, and the National Federation of Independent Business announced that it is "unable to support the House tax reform plan in its current form."
"This bill leaves too many small businesses behind," the NFIB wrote in a statement. "We believe that tax reform should provide substantial relief to all small businesses, so they can reinvest their money, grow, and create jobs."
A main point of the bill is a proposal to cut the corporate tax rate to 20 percent from 35 percent, which could shrink federal revenue by $1.5 trillion in the next 10 years. This was one of Trump's main campaign promises.
Additionally, Republicans promised to lower the tax rate for "pass-through" businesses to 25 percent. A pass-through business is a nonpublic company (think: LLCs and S corps) that doesn't pay income taxes. Instead, their profits "pass through" to the owner, who then pays taxes on them at an individual tax rate. About 95 percent of the companies in the U.S. are structured as pass-through businesses.
However, to prevent the rate from becoming a loophole for individuals, tax writers created a formula that will make business owners pay a higher individual tax rate on income that they receive as wages. This has angered some entrepreneurs, including the Small Business Majority, a left-leaning advocacy organization, which wrote in a statement that slashing the pass-through rate would help very few owners.
"Nearly nine in 10 businesses that pass through their income already pay at the 25 percent rate or less," the organization stated. "Instead, this proposal would primarily help wealthy individuals rather than small businesses."
What's more, owners of some pass-through businesses would also have to comply with new anti-abuse rules to reap the benefits of the new tax rate, according to the Tax Policy Center. The rules would determine what's real business income and what's labor income intended to look like business income. Labor income would be taxed at rates up to 39.6 percent under current law, according to Business Insider.