Report: Tax programs not felt by small business yet

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(The Center Square) – Small businesses in the United States have yet to feel the benefits of the Trump administration’s new tax legislation, according to a new report from the U.S. Chamber of Commerce.

The chamber released its Small Business Index report on Tuesday, which found inflation as a top concern for business owners across the country as the U.S. continues its conflict with Iran and the uncertainty over tariff policies continue.

The chamber conducted its survey from Feb. 25 to March 11, near the beginning of U.S. military strikes against Iran that have continued for more than one month. Tom Sullivan, senior vice president of small business policy at the chamber, said he hoped the small business economy would be doing better than the report revealed.

The report showed, in quarter one of 2026, 16% of businesses reported increasing their staff over the past year, down from 23% in quarter four of 2025. Similarly, 37% of business owners planned to increase investments in the next year, a decrease from 44% in quarter four of 2025.

Fewer businesses were comfortable with their overall cash flow, as only 20% said they were “very comfortable” with current cash flows, down from 31% in quarter three of 2025.

“We know that uncertainty is the dark cloud over small businesses,” Sullivan said. “Last quarter of last year we asked the questions in the middle of the government shutdown, this quarter we asked the questions right at the beginning of the military conflict with Iran.”

Sullivan said higher gas prices due to the conflict in Iran has a unique effect on small business owners. He said most owners rely on gas for a large portion of their business operations and can feel the effects of rising prices.

“That price hike is in their face every day, not just as a small business owner, but as a citizen,” Sullivan said. “They’re driving by the gas station that has it flashed in front of them.”

However, Sullivan said he hoped tax policies from the “One Big Beautiful Bill,” which was signed into law on July 4, 2025, would help uplift small businesses. He pointed to no tax on overtime, no tax on tips and tax expense programs for advancements in technology.

Sullivan said he talked to business owners in the manufacturing sector who have reported no taxes on overtime to be a great relief.

“A happy employee is a happy small business,” Sullivan said.

Over the last year, tariff policies in the United States have remained an ever present concern for small business owners, Sullivan said. He said the leaders in the small business community are skeptical that they will receive tariff refunds, which adds to uncertainty.

The report found about 28% of small business owners said the economy is in “good health,” down by 10% from the previous quarter.

“Small business owners are busy running their businesses, they’re not necessarily keyed into Supreme Court decisions,” Sullivan said.

Still, he said uncertainty with tariff plans can cause significant pain for small business owners, especially when they attempt to plan for the future. He pointed to a small business coffee shop owner in Minnesota who was affected by changing tariff policies on coffee products.

“It’s that uncertainty that has been a wet blanket on small business growth for over a year,” Sullivan said.

The report found 61% of small business owners planned to increase revenue, down from 65% last quarter and 69% in quarter one of 2025. About 19% of owners reported increasing concerns over providing employees with healthcare and other benefits.

Despite the report’s findings of pessimism among small business owners, Sullivan said he is optimistic for the next quarter. He said small businesses should see more refunds from the IRS after the implementation of more friendly tax policies that should help out small businesses.

“I’m optimistic that in this next quarter we’ll see that spend go up based on the changes in tax law,” Sullivan said.

The U.S. Chamber is working with the Trump administration to implement a tariff refund policy framework by April 20.

“We are working with the administration to try to get information into the hands of small business importers,” Sullivan said. “I do not expect that it’s going to result in a giant jump or boost in small business confidence.”