Rep. David Kustoff, R-Tenn., leaves a meeting of the House Republican Conference at the Capitol Hill Club on Sept. 9, 2025.
Tom Williams | CQ-Roll Call, Inc. | getty images
Representative David Kustoff, a Republican member of the House committee that writes tax policy, introduced a bill Tuesday to lower taxes on small businesses to add the tax policy to the GOP Homeland Security funding effort.
The Tennessee lawmaker first shared the bill with CNBC. It would increase the qualified business income deduction for non-corporate business owners to 23%, up from the 20% that was adopted as part of President Donald Trump’s 2017 overhaul of the U.S. tax code.
“This bill is good policy. It benefits small businesses across the country. It benefits family farms,” Kustoff, a member House Ways and Means CommitteeSaid in an interview with CNBC.
Kustoff’s proposal, which has six House GOP co-sponsors, was introduced the same day Senate Republicans released legislative language to begin the process of funding part of the Department of Homeland Security, which has been shuttered since February.
Republican leaders plan to use the budget reconciliation process to fund parts of DHS that Democrats have objected to, including what they view as overly aggressive immigration enforcement policies. Budget reconciliation is a procedural device used to pass spending-related matters that requires a simple 50-vote majority in the Senate, whereas overcoming a filibuster typically requires 60 votes. This is the same process Republicans used to pass their huge tax and spending package in 2025 known as “One Big Beautiful Bill.”
He budget solution solution The bill introduced Tuesday did not provide instructions to tax-writing committees in the House or Senate, but Kustoff said the bill would likely be amended before passage. And there is talk about subsequent budget reconciliation bills before the end of this Congress, which could provide Republicans additional opportunities to advance tax and spending priorities that are otherwise unlikely to garner Democratic support.
“This is moving in real time,” Kustoff said of the reconciliation process. “And that’s why I thought, and my colleagues thought, that this bill should be filed now. There’s a possibility that we can move down the path of reconciliation.”
Kustoff said the idea of a cut for small businesses was to balance out the tax cuts given to large corporations as part of the 2017 GOP tax bill. The Tax Cuts and Jobs Act reduced the federal corporate income tax rate from 35% to 21%.
The 20% small-business cut was made permanent in the 2025 Republican tax and spending bill.
But this proposal can be expensive. The Joint Committee on Taxation, a non-partisan congressional panel that assists tax writers, Estimated in December 2023 That a 20% cut would reduce federal tax revenues by $57.6 billion in 2024 and $60.9 billion in 2025.
Still, Kustoff said he is optimistic there could be broad Republican support, though if it were included in reconciliation legislation, supporters would need to find a “payoff” — something to cut spending or raise revenue — to offset the costs.
“However, I would argue that the benefits, from a revenue standpoint, will offset the costs,” Kustoff said.