As the most dynamic market entities, small and micro enterprises (SMEs) play a significant role in promoting China's economic development. Therefore, SMEs have always been the key support target of China's tax reduction policies and the focus of scholars' attention. The literature collection process was first introduced, with an analysis of literature characteristics and an exploration of the basic connotation of “SMEs” from multiple perspectives. Secondly, based on the dual perspectives of micro-enterprise operations and macroeconomic impacts, the research findings on the effectiveness of tax reduction policies for SMEs were comprehensively reviewed. After that, the main factors influencing the tax reduction effects for SMEs were analyzed from three aspects: the tax system, micro-enterprises and macroeconomic environment. Furthermore, the optimization path for tax reduction policies for SMEs was discussed. Finally, the current research deficiencies related to SMEs were analyzed, and four directions that future research in this field should focus on were pointed out. These include conducting in-depth research on the implementation effects and impact mechanisms of tax reduction policies for SMEs, thoroughly examining the linkage effects among tax reduction policies and between tax reduction policies and other macroeconomic policies, introducing more precise analytical tools to enhance the accuracy and effectiveness of tax reduction policy design, and conducting international comparative studies to provide references for the improvement of tax reduction policies in China.