ADA opposes small business tax hike

Sends Grassroots Alert, coalition letter to Senate

The ADA expressed opposition to the removal of pass-through entity tax deductions in a June 10 Grassroots Alert and Association-led coalition letter addressed to Senate Republican leadership.  

Currently included in the budget reconciliation package, this provision denies the pass-through entity tax deductions for many small businesses, including dental practices. The measure decreases tax parity and singles out certain service-based professions, who are already denied the full benefit of the qualified business income deduction, for unfair tax treatment. In the Grassroots Alert, the ADA said the new provision could result in a new tax increase on dentists who own or are partners in practices structured as pass-through entities, impacting approximately 30% of dentists nationally.  

The alert emphasized that the provision could raise taxes on dental practice owners operating as pass-through entities, which accounts for 90% of all practices. Additionally, it would reduce parity between pass-through businesses and large corporations, penalize health care providers amid rising operating costs, and jeopardize reinvestment in staffing, technology, and patient care – especially in rural or underserved areas.   

It urged members to call or email their senators asking them to “fix this unfair tax increase on dentists and other service-based small businesses” before the bill moves to the Senate floor.  

Additionally, the ADA spearheaded a coalition letter of 32 health organizations voicing concern regarding the pass-through entity tax provision and highlighting the need for sound tax policy for practices to remain financially viable.  

The coalition said the deduction is not a loophole or workaround, as it reflects Congress’ original intent to preserve fair treatment for all small businesses. Its elimination would unfairly single out service-based professionals and further widen the tax disparity between them and larger corporations, according to the coalition. It could also lead to staff reductions, service limitations, and even practice closures, directly affecting patients’ access to care, the letter noted.  

The group added that this is not just a tax issue, but also a small business and patient access issue.  

“We strongly urge Congress to restore the [pass-through entity tax] deduction as the Senate deliberates on the reconciliation bill. The undersigned healthcare organizations, representing millions of healthcare professionals, support an amendment to protect [pass-through entity tax] deductibility and ensure that small dental and medical businesses are treated fairly under the tax code,” the coalition said.