The Importance of Small Businesses in the 2026 Midterms

To secure victory in the 2026 midterms, Republicans must focus on America’s extensive network of small businesses. The White House recognizes their significance, as demonstrated by the launch of National Small Business Week, highlighting their contribution to both the economy and job creation. Small business owners, representing over 36.8 million entities with 500 or fewer employees, will play a crucial role in determining electoral outcomes.

Significance of Small Businesses

Small businesses are vital to the U.S. economy. They employ 46% of the private sector workforce, translating to more than 62 million jobs. A striking 96% of these businesses have fewer than 10 employees, encompassing various sectors from grocery stores to professional services such as doctors, lawyers, and accountants. Between 1996 and 2024, they generated upwards of 20.7 million jobs.

These businesses are key players in U.S. innovation, particularly those with 5-9 employees, who hold more patents per employee than other entities. Furthermore, they are fundamental to the reindustrialization movement, with approximately 98% of U.S. manufacturers employing fewer than 500 employees.

Challenges Faced by Small Business Owners

Despite their contributions, small business owners face significant challenges. Federal, state, and local taxes can consume 20-30% of their earned income, according to the Tax Foundation. Many spend over $10,000 annually on tax and regulatory compliance, averaging 200 to 300 hours per year on compliance tasks, equivalent to 32 full business days.

Small businesses benefited from Trump’s Big Beautiful Bill, which helped raise the Section 179 expensing cap to $2.5 million and restored 100% bonus depreciation for equipment. The bill also cemented the 20% Qualified Business Income deduction, preventing tax hikes for pass-through entities. If Democrats repeal these reforms as part of their “tax the rich” agenda, small businesses could face devastating financial consequences.

Political Implications and Republican Strategy

A Stanford study reveals that business owners tend to lean Republican more than non-owners by nearly 18 percentage points. Their firsthand experiences with business operations shape their broader political views. By addressing high taxes, Republicans can attract this demographic, offering relief from overtaxation, regulation, and concerns like shoplifting.

This Republican inclination extends beyond traditional small businesses. The study found that doctors owning practices are more likely to align with Republican candidates. However, this influential group of voters has lacked significant research attention, highlighting a valuable opportunity for the GOP.

Mobilizing Small Business Constituency

With a 36-million-strong national constituency employing nearly half of the U.S. workforce and contributing two-thirds of job growth over 25 years, the GOP should harness the potential of small business owners, including Hispanic entrepreneurs who represent one in four new businesses.

Strategic steps forward should encompass:

• Launching campaigns focused on founders and small business owners, emphasizing the benefits received from Trump’s policies.
• Promoting GOP support for the American tradition and startup culture sustained by small businesses.
• Highlighting inclusive interests represented by the new Republican Party.

Political parties succeed when built on shared interests rather than rigid ideologies. The golden age envisioned by past leaders extends beyond Silicon Valley’s elite to every corner of the nation, encompassing founders and entrepreneurs in need of political and presidential support.