Late May reporting indicates that 19 states have already fully implemented President Donald Trump’s One Big Beautiful Bill Act “no tax on tips.”
No tax on tips allows workers to deduct up to $25,000 of their income from their federal taxes. For millions of families, that will prove enough to pay off some of their highest monthly budgetary line items, including rent and food expenses.
But the 2026 tax cut party doesn’t have to end there. The Treasury Department already has the tools it needs to provide critical tax relief to America’s small businesses.
IT’S TIME TO PASS THE SECURE DATA ACT
There wouldn’t be any drawn-out negotiations, bloated legislative packages stuffed with unrelated provisions, or obstructionism from lawmakers who struggle to support even straightforward tax relief. All the president would need to do is direct his Treasury Department to fix what economist Steve Moore — one of the architects of his landmark 2017 tax cut package — called a flawed congressional interpretation of the president’s signature tax law.
When Congress passed Trump’s Tax Cuts and Jobs Act, it lowered taxes on corporations and created the 20% pass-through deduction, Section 199A, to ensure small businesses received comparable relief. The goal was to put everyone on the same playing field — with no special favors, earmarks, or giveaways — to ensure every entrepreneur has maximal opportunity to grow.
However, Congress also created a category called “Specified Service Trades or Businesses.” Certain professions, including financial services, were placed in that category, while insurance advisers were not.
As a result, two firms offering similar financial products and advice can face very different tax treatment simply because Washington places them in different statutory buckets.
A local adviser helping teachers and retirees plan for retirement can end up paying dramatically higher taxes than a more well-to-do firm selling nearly identical financial products, simply because lobbyists and lawmakers drew arbitrary lines behind closed doors with certain members of Congress.
That’s not the kind of free market competition that the president intended to create with the TCJA. It’s just more business as usual of the government favoritism and line-drawing variety.
The tax implications of this congressional foul play are huge.
Instead of seeing their top marginal rate fall from 39.6% to 29.6% such as other small businesses have, many investment advisers now face a 37% rate because they were carved out of the full small-business deduction. This affects their ability to expand and risks pushing up costs for their everyday customers.
Trump is right: the tax code should treat economically similar businesses similarly — because when it doesn’t, it creates uneven competition and unintended advantages. The time has come for the Treasury Department to end this disparity.
Treasury retains meaningful discretion in how Section 199A classifications are defined and applied. The department and Congress can revisit how “financial services” are interpreted, ensure that economically similar business models receive consistent treatment, and narrow regulatory distinctions that create distortions beyond what Congress clearly required.
Trump’s second term has already delivered major tax relief for families, and he is right to promote them now as midterm campaigns heat up. The only thing that would play better than the promotion of kitchen-table, consumer-oriented policies is ensuring the government isn’t unintentionally picking winners and losers when it comes to tax benefits for small businesses.
AT 82, MARILYN BURNS IS STILL DEFINING THE AMERICAN SMALL BUSINESS DREAM
The president and his team have the opportunity to deliver more targeted tax relief to small-business owners, strengthen competition on Main Street, and demonstrate that pro-growth policy can be implemented intelligently without legislative gridlock.
The opportunity for immediate reform is ripe. Here’s hoping the administration takes it.
Steve Cortes is president of the League of American Workers and adviser to Catholic Vote and a former senior adviser to Donald Trump and JD Vance. He is a former broadcaster for Fox News and CNN.