Small business tax statistics show a large and varied business population. In Tax Year (TY) 2023, partnerships filed 4,575,280 returns and reported 30,239,463 partners. TY 2021 data counted an estimated 33,252,027 nonfarm businesses operating as sole proprietorships. The figures below separate measurement years, business structures, and current 2025 tax rules.
Contents
- Business structures at a glance
- Partnership filing and income trends
- Where partnership activity grew
- Partner counts by partnership size
- Sole proprietorship statistics
- Self-employment tax
- Selected 2025 deductions and reporting rules
Business structures at a glance
The available IRS statistics cover partnerships and nonfarm sole proprietorships in different tax years, so they should not be added together as one current business count. Partnership figures are for TY 2023 unless another year is stated. Sole proprietorship figures are primarily for TY 2020 and TY 2021.
| Measure | Result | Measurement period and source |
|---|---|---|
| Partnership returns | 4,575,280 | TY 2023, IRS Partnership Returns, Tax Year 2023 |
| Partnership returns in prior year | 4,500,186 | TY 2022, IRS Partnership Returns, Tax Year 2023 |
| Partners | 30,239,463 | TY 2023, IRS Partnership Returns, Tax Year 2023 |
| Nonfarm businesses with sole-proprietorship activity | 33,252,027 estimated | TY 2021, IRS SOI Bulletin Summer 2024 |
| Individual returns with nonfarm sole-proprietorship activity | Approximately 29.3096 million | TY 2021, IRS SOI Bulletin Summer 2024 |
| Small business self-employment tax | $74.7 billion | TY 2023, SBA Office of Advocacy |
The partnership total increased 1.7% from TY 2022 to TY 2023, while the number of partners increased 5.0%. The IRS partnership total therefore includes many different operating and ownership patterns rather than one representative small business model.
Partnership filing and income trends
Partnership activity grew in filing volume but declined in the amount available for allocation after deductions. Partnerships passed through $2,099.4 billion in total income minus total deductions available for allocation to partners in TY 2023. The corresponding TY 2022 amount was $2,558.0 billion, making the reported decline 17.9%.
The IRS also reports the same TY 2023 allocation as $2,099.4 billion allocated to partners after deductions, compared with $2,558.0 billion allocated in 2022. These are the same year-over-year amounts, so they are presented once here rather than counted as separate measures.
The 2023 partnership totals were:
- 4,575,280 partnership returns, compared with 4,500,186 in TY 2022, a gain of 75,094 returns.
- 30,239,463 partners, compared with 28,797,574 in TY 2022.
- Approximately 32.8% of partners in the real estate and rental and leasing sector.
The combination of more returns, more partners, and lower post-deduction income illustrates why a filing count alone cannot describe the tax profile of partnerships. A partnership may be small by return count but connected to a different number of partners, industries, and allocations.
Where partnership activity grew
Finance and insurance partnerships rose from 452,181 in TY 2022 to 490,731 in TY 2023, an 8.5% increase. Their partner count rose from 8,990,673 to 9,579,458, an increase of 588,785 partners or 6.5%.
Within that broad segment, securities, commodity contracts, and other financial investments and related activities increased from 341,392 partnerships to 366,076, up 7.2%. The number of partners in that activity rose from 7,218,400 to 7,758,215, up 7.5%.
Other financial investment activities increased from 335,124 partnerships to 359,420, also up 7.2%. Its partner count rose from 7,162,782 to 7,706,653, up 7.6%. Funds, trusts, and other financial vehicles increased from 70,068 partnerships to 77,596, a 10.7% increase, while their partner count fell from 1,511,159 to 1,476,946, down 2.3%.
Other finance and insurance showed a larger change in partners than in returns. Partnerships increased from 40,722 to 47,059, up 15.6%, while partners increased from 261,114 to 344,297, up 31.9%.
Not every finance-related category increased on both measures. Securities and commodity contracts and exchanges partnerships grew from 6,268 to 6,656, up 6.2%, while partners fell from 55,618 to 51,562, down 7.3%.
Real estate and rental and leasing partnerships rose from 2,282,238 to 2,320,939, up 1.7%. The segment added 155,433 partners, increasing from 9,750,424 to 9,905,857, or 1.6%. Real estate partnerships alone rose from 2,235,245 to 2,281,245, up 2.1%, and partners increased from 9,587,435 to 9,774,755, up 2.0%.
| TY 2023 partnership activity | 2022 | 2023 | Change |
|---|---|---|---|
| Finance and insurance partnerships | 452,181 | 490,731 | +8.5% |
| Finance and insurance partners | 8,990,673 | 9,579,458 | +6.5% |
| Real estate and rental/leasing partnerships | 2,282,238 | 2,320,939 | +1.7% |
| Real estate and rental/leasing partners | 9,750,424 | 9,905,857 | +1.6% |
| Funds, trusts, and other financial vehicle partnerships | 70,068 | 77,596 | +10.7% |
| Funds, trusts, and other financial vehicle partners | 1,511,159 | 1,476,946 | -2.3% |
The IRS data also show contraction in selected real estate and leasing categories. Lessors of residential buildings and dwellings and cooperative housing increased from 813,619 partnerships to 850,331, up 4.5%, while their partners slipped from 3,541,266 to 3,530,819, down 0.3%. Lessors of nonresidential buildings rose from 823,716 to 853,379, up 3.6%, and their partners rose from 3,226,547 to 3,504,082, up 8.6%.
Lessors of miniwarehouses and self-storage units fell from 22,276 partnerships to 18,381, down 17.5%, while partners declined from 105,915 to 102,574, down 3.2%. Other real estate activities declined from 420,942 partnerships to 409,213, down 2.8%, and partners declined from 2,015,233 to 1,965,323, down 2.5%. Rental and leasing services and lessors of nonfinancial intangible assets fell from 46,993 partnerships to 39,694, down 15.5%; partners fell from 162,989 to 131,102, down 19.6%.
Partner counts by partnership size
TY 2023 partnership statistics show that most listed partnerships had fewer than three partners: 2,731,229 partnerships. The associated table reports 14,545 partners, or 0.5% of total partners. Partnerships with at least three and fewer than five partners numbered 1,075,958, with 13,699 partners, or 1.3%.
The next size bands were 445,998 partnerships with five to fewer than ten partners and 162,768 with ten to fewer than 20 partners. Their reported partner shares were 2.0% and 3.8%, respectively. Partnerships with 20 to fewer than 30 partners numbered 54,066 and represented 6.2% of partners; those with 30 to fewer than 40 numbered 32,425 and represented 7.0%.
Larger bands had fewer partnership returns but higher reported partner shares: 15,783 partnerships with 40 to fewer than 50 partners represented 10.2%; 13,971 with 50 to fewer than 60 represented 10.4%; 9,351 with 60 to fewer than 70 represented 12.2%; 5,973 with 70 to fewer than 80 represented 16.6%; 4,211 with 80 to fewer than 90 represented 19.6%; and 3,524 with 90 to fewer than 100 represented 20.9%.
Partnerships with at least 100 partners numbered 20,021 and accounted for 5,376 partners, or 26.9%, in the IRS size distribution. These figures are reported as published and are not used here to infer an average or a separate business-size definition.
Sole proprietorship statistics
In TY 2021, nonfarm sole-proprietorship activity appeared on approximately 29.3096 million individual income tax returns. The IRS estimated 33,252,027 nonfarm businesses for that activity. The return count and business estimate measure related but different things, so they should not be treated as identical totals.
For TY 2020, nonfarm sole-proprietorship activity appeared on approximately 28.4 million individual income tax returns, up 1.9% from 2019. Total receipts decreased 2.1%, and deductions decreased 1.1%. Profits fell 5.1% to $337.2 billion.
The IRS SOI Bulletin Spring 2023 also reports that TY 2019 nonfarm sole-proprietorship activity included just under 9.2 million individual income tax returns with expanded income of $200,000 or more, representing 5.8% of all returns filed. In the same high-income-return reporting, returns with no worldwide income tax liability numbered 7,391, up 2.6% from 2018. These are TY 2019 figures and should not be read as current-year estimates.
Self-employment tax
Small business owners paid an estimated $74.7 billion of the $81.1 billion in total self-employment tax revenue in TY 2023, according to the SBA Office of Advocacy. Small businesses paid approximately 92% of self-employment taxes each year from 2017 through 2023.
Small business sole proprietorships accounted for $69.2 billion of the $74.7 billion paid by small businesses in 2023. Small business partnerships accounted for $5.5 billion. These components describe the SBA Office of Advocacy estimate and are not a tax calculation for an individual business.
For 2025, IRS Publication 334 states that the self-employment tax rate is 15.3%, consisting of 12.4% Social Security tax and 2.9% Medicare tax. The Social Security portion applies to the first $176,100 of combined wages, tips, and net earnings. There is no maximum limit on earnings subject to the 2.9% Medicare portion in 2025. A taxpayer must generally file Schedule SE when net earnings from self-employment are $400 or more.
Selected 2025 deductions and reporting rules
IRS Publication 334 lists a 2025 business mileage rate of 70 cents per mile. The maximum section 179 expense deduction is $2.5 million, and the deduction is reduced when the cost of qualifying property placed in service exceeds $4 million. The section 179 election for certain sport utility vehicles is limited to $31,300.
The 2025 bonus depreciation deduction is 100% for certain qualified property acquired after January 19, 2025. An alternative bonus depreciation rate is 40% for certain property placed in service after that date, or 60% for property with a long production period and certain aircraft.
Other quantified provisions in Publication 334 include:
- Qualified overtime compensation can generate a deduction of up to $12,500, or $25,000 for married taxpayers filing jointly, beginning in 2025.
- Qualified tips can produce a deduction capped at $25,000 beginning in 2025.
- Qualified sound recording production costs can be deducted up to $150,000 for productions commencing after July 4, 2025, and before January 1, 2026.
- The de minimis safe harbor limit is $5,000 per item or invoice for taxpayers with an applicable financial statement, and $2,500 without one.
- Businesses reporting consumer product sales on Form 1099-MISC must report $5,000 or more of such sales to a person for resale outside a permanent retail establishment.
- Form 1099-NEC generally applies when a business pays at least $600 during the year to a person in the course of business.
- A special January 31 filing deadline applies when Form 1099-NEC reports sales totaling $5,000 or more of consumer products.
Publication 334’s restaurant example combines a $25,000 net-profit business with a $500 net-loss business, producing combined earnings subject to self-employment tax of $24,500. That is an instructional example, not an estimate of the typical restaurant or small business.