Rep. David Kustoff, R-Tenn., leaves a meeting of the House Republican Conference at the Capitol Hill Club on Sept. 9, 2025.

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Rep. David Kustoff, a Republican member of the House committee that decides tax policy, introduced a bill Tuesday to cut taxes on small businesses to incorporate tax policy into GOP Homeland Security funding efforts.

The Tennessee lawmaker first shared the bill with CNBC. This would increase the qualified business income deduction for non-business owners to 23%, up from the 20% established 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 businesses,” said Kustoff, a member of the House Ways and Means Committee, in an interview with CNBC.

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Kustoff’s proposal, which has six Republican co-sponsors in the House, was introduced the same day Senate Republicans released a bill that would 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 the parts of DHS that Democrats have objected to in protest at what they see as overaggressive immigration policies. Budget reconciliation is a procedural tool for passing spending-related matters that requires a simple majority of 50 votes in the Senate, as opposed to the 60 votes typically required to overcome a filibuster. It’s the same process Republicans used in 2025 to pass their massive tax and spending package known as the “One Big Beautiful Bill.”

The budget reconciliation resolution submitted Tuesday did not include instructions for the tax committees in the House or Senate, but Kustoff said there is a possibility for changes to the bill before passage. And there is talk of more budget reconciliation legislation before the end of this Congress, which could give Republicans additional opportunities to pursue tax and spending priorities that otherwise would be unlikely to attract Democratic support.

“It’s moving forward in real time,” Kustoff said of the reconciliation process. “And that’s one reason why I thought, and my colleagues thought, that this bill should be filed now. There’s a possibility that we could get on the reconciliation train.”

The idea of ​​a small business deduction itself was intended to offset the tax cuts given to larger companies under the 2017 GOP tax law, Kustoff said. The Tax Cuts and Jobs Act reduced the federal corporate tax rate from 35% to 21%.

The 20% small business deduction was made permanent in the Republican Tax and Spending Act of 2025.

But the proposal could be expensive. The Joint Committee on Taxation, a bipartisan congressional panel that assists tax writers, estimated in December 2023 that the 20% deduction would reduce federal tax revenue by $57.6 billion in 2024 and by $60.9 billion in 2025.

Still, Kustoff said he was optimistic there could be broad Republican support. However, if this were to be included in the reconciliation bill, advocates would have to find a “pay-for” – something to reduce spending or increase revenue – to offset the costs.

“However, I would argue that the benefits from a revenue perspective would offset the costs,” Kustoff said.

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