Karen Kerrigan, President and CEO, Small Business and Entrepreneurship Council (SBE Council)
Small Business and Entrepreneurship Council
A lot of small business owners will tell you that they are always working because running your own business can be a 24/7 job. When you are working at that pace, it is hard to follow legislative efforts at the federal, state, and local levels, much less advocate for yourself.
As the President and CEO of the Small Business and Entrepreneurship Council (SBE Council), Karen Kerrigan is the group’s chief advocate for its members. Its network of more than 100,000 member supporters includes entrepreneurs and small business owners, state and local business organizations, corporate partners, and associations and the SBE Council works with them to strengthen the environment for entrepreneurship, investment, and innovation.
I recently had the opportunity to speak with Karen about her work with the SBE Council and current policy environment. Below is our conversation, edited for clarity.
Rhett Buttle: The SBE Council celebrated its 30th anniversary last year. Can you describe your organization’s work in supporting protecting small business and promoting entrepreneurship?
Karen Kerrigan: The work has been wide-ranging and impactful in terms of leading and co-partnering on policy advocacy initiatives and projects, the goal being to strengthen the ecosystem for strong startup activity and small business growth – both domestically and around the world. Over the course of 30 years, we have witnessed our share of disruptive market events and economic conditions that have challenged entrepreneurs and small business owners in every corner of our nation. Likewise, there have been periods of economic stability and strong growth. Through it all – in good times and in “bad” – our principled policy mission has focused on solutions and legislation that lifts burdens, modernizes government rules, and works to incentivize and empower entrepreneurs to create and launch innovative businesses that help our nation emerge from disruptive periods stronger or leverage periods of great opportunity and growth with more inclusive outcomes. From tax reform to opening global markets, access to capital to strengthening intellectual property, regulatory modernization, affordable health care, and a wide array of other issues impacting the business environment, SBE Council has been at the center of key policy campaigns with the goal of improving policies to strengthen the entrepreneurial ecosystem and opportunity for all.
Rhett Buttle: We are almost six months into the new administration. From your perspective, what are some of the opportunities and challenges small businesses have faced with the policies that have been implemented?
Karen Kerrigan: I’ll turn to SBE Council’s latest Small Business Check Up Survey for my response, which we released in early July. In the survey, small business owners definitely craved certainty regarding the 2017 tax provisions that were set to expire at year-end, and 83% of small business owners wanted Congress to address those before the August 2025 recess, a feat that has been accomplished. So, the success of this early policy opportunity, where many of the tax relief and investment incentives are now permanent – like the 20% small business deduction, immediate R&D expensing, permanent death tax exemption levels, bonus depreciation, the lower individual rates, among other provisions – create a more stable environment for entrepreneurs and small business owners in terms of capital availability and being able to better plan for investment and growth opportunities. According to the survey, a majority of business owners anticipated negative effects for their businesses if the tax provisions were allowed to expire. Beyond the highly promoted tax provisions of the “One Big Beautiful Bill” signed by the President, small businesses can also benefit from an improved child care and family leave credit, and of course the “no tax on tips and overtime” provisions help to support their employees.
In terms of challenges, the big outlier is the trade issue, where 73% of small business owners express concern about tariffs and the direction of tariff policy. Still, only 9% report “significant negative” effects, with most experiencing slightly negative (44%) or no effect (35%). Small business owners definitely want clarity and certainty on how these trade agreements will land, and the effect of tariffs on their costs.
Rhett Buttle: The president recently signed the budget reconciliation bill into law with many provisions that SBE Council has supported. What are some of those provisions and how do you feel they support small business and entrepreneurs?
Karen Kerrigan: There are benefits for many types of small businesses across industries, at various stages of growth, and takes into account various business structures. In general, the bill allows small businesses to keep more capital and provides strong investment incentives that help small firms innovate, invest and stay competitive. For example:
The qualified business income (QBI) deduction (aka, 20% small business deduction) has been made permanent. Combined with lower and permanent individual tax rates, many business owners pay lower rates overall. Of course, there are income and other restrictions, but with nearly 50% of small business owners reporting they have benefited from this tax break, permanency will be a big boost to many in the small business community. The loss limit for pass-through businesses is also permanent and the death tax exemption ($15 million for individuals and $30 million for married couples) is now permanent, and the pre-2022 limit on interest expense deductions is restored.
In terms of investment incentives, 100% bonus depreciation and immediate100% R&D expensing (retroactive to January 1, 2025) are permanent. Moreover, for eligible small businesses that previously capitalized and amortized R&D expenses in 2022 through to the current period, they can choose to amend prior returns and claim immediate deductions. First-year expensing (Section 179 expensing) got a boost to $2.5 million for qualifying assets bought and placed in service after 2024. Small manufacturers can immediately expense production property (expires 2029).
Tax provisions supporting employees are significant. For example, the tax credit for employer-provided child care is boosted to 50% for small businesses (up from 25%), and small business will be able to pool; the family and medical leave credit is made permanent; employer educational assistance plans covering student loan payments are made permanent and the dollar limit of $5,250 is inflation adjusted; and the “no tax on tips and overtime” provisions – highly supported by small business owners according to our surveys, were a part of the package. In terms of health care and coverage support, the bill allows health savings accounts (HAS) owners to spend up to $150 on direct primary care, telehealth is allowed to continue via HSA-compatible high-deductible health plans, and starting January 2026, HSAs will be deemed compatible with bronze-level coverage and catastrophic coverage available under the Affordable Care Act.
The qualified small business stock (QSBS) has been improved, thus encouraging more investments in startups and small businesses. The exclusion limit increased from $10 million to $15 million (adjusted annually for inflation), and the 100% exclusion for gain on the sale of QSBS (held for five years), moves to a tiered structure: 50% exclusion held at least 3 years, 75% held at least 4 years, and 100% for stock 5 years or more.
In terms of miscellaneous provisions, the threshold for reporting 1099-NEC non-employee compensation increased from $600 to $2,000, and is indexed for inflation after 2026, and 1099-K reporting returns to its previous $20,000 and 200 transaction levels for 2025 (and beyond).
Of course, there are many other provisions impacting small businesses on the individual side. I would encourage small business owners to immediately review all the changes that impact their businesses, as they may begin to take advantage of these changes now.
Rhett Buttle: Going forward, what steps are needed at the federal, state, and local levels to strengthen the ecosystem for small businesses?
Karen Kerrigan: No doubt that small business owners continue to face challenges. Our latest survey continues to show that their operational capacity and growth potential continue to be impacted by the lack of access to capital and skilled employees. Government at all levels and key institutions need to collaborate to better prepare America’s workforce for the modern needs of small businesses across industries along with the technological changes that will impact jobs – such as AI, which I view as a positive in terms of empowering employees. Entrepreneurs and small business owners need to be at the table in terms of helping to identify what the challenges are, and more importantly in helping to develop realistic and practical solutions. Moreover, government and key institutions need to recognize the strong desire that individuals have – especially young people – to become entrepreneurs and launch new businesses. Technology and tech platforms are a key driver in enabling and boosting the entrepreneurial spirit and startup growth. It is critically important that governments and institutions play a supportive role in technical training to boost opportunity in every corner of our country.
Rhett Buttle: If a small business owner or aspiring entrepreneur wants to join the SBE Council, what should they do and what kind of resources will they receive?
Karen Kerrigan: I would encourage entrepreneurs and small business owners – or individuals who are considering starting a business – to sign up for our free weekly enews “Small Business Insider” to get an idea of the issues we work on, and the type of involvement and support that we offer. Interested individuals can do so here: Small Business & Entrepreneurship Council. SBE Council’s best ideas – on policy solutions, new projects, advocacy, and research – come from our members and the small business community at large. The voice of every entrepreneur and small business owner truly makes a difference, and their advocacy and ideas play a key role in our success.
