Announces Support from Sen. Blackburn, Leading Small Business Organizations
Legislation Quadruples the Small Business Start-up Deduction
WASHINGTON — Today, Congressman Vern Buchanan, Vice Chairman of the House Ways and Means Committee, and Congressman Mike Kelly (R-Pa.), Chairman of the Ways and Means Tax Subcommittee, announced that several of the nation’s leading pro-growth and small business organizations have endorsed their legislation to quadruple the amount of start-up costs small business owners can deduct in their first year of operations. They also announced support from Senator Marsha Blackburn (R-Tenn), member of the Senate Finance Committee, who intends to lead the Senate companion legislation.
Buchanan’s American Innovation Act (H.R. 1778) would increase the deduction allowance from $5,000 to $20,000 and raise the phase-out threshold from $50,000 to $120,000. The bill also allows partnerships and S corporations to be eligible for the deduction.
“Entrepreneurship is at the heart of the American Dream,” said Buchanan. “During National Entrepreneurship Week, we should be focused on removing barriers for the job creators who drive the American economy. My American Innovation Act cuts taxes on start-up costs so small businesses can reinvest in their companies, hire workers and strengthen their local communities.”
“The American Innovation Act allows for investments in research and development to help small businesses grow and allow entrepreneurs to take that next step in their American Dream,” said Kelly. “This pro-growth tax policy will kickstart our small businesses, and it make it easier for these businesses to create jobs, support families and grow our local economies.”
“Small businesses are the backbone of our nation’s economy,” said Blackburn. “The American Innovation Act would promote new business innovation by expanding tax incentives and putting more money back in the pockets of Tennesseans who are working to get their startups off the ground.”
Joining Buchanan and Kelly in leading the legislation are Reps. Don Bacon (R-Neb.), Ron Estes (R-Kan.), David Kustoff (R-Tenn.), Ryan Mackenzie (R-Pa.), Carol Miller (R-W.Va.), Max Miller (R-Ohio), Blake Moore (R-Utah), Adrian Smith (R-Neb.) and Claudia Tenney (R-N.Y.).
According to the Small Business Administration, from 1994-2021, over 50 percent of new small businesses established during that period failed within five years. A U.S. Census Bureau report also found that 46 percent of businesses began with less than $25,000, underscoring the need to support small businesses with increased access to capital at the early stages of business creation.
Buchanan’s American Innovation Act has been endorsed by the S Corporation Association, the National Electrical Contractors Association, the National Association of Wholesalers, the National Venture Capital Association, the Angel Capital Association, National Taxpayers Union, the Center for a Free Economy and Americans for Prosperity.
“Nearly all job creation in the US comes from start-ups. Without them, millions of Americans would struggle to find work. The American Innovation Act encourages entrepreneurship and job creation by reducing the costs of starting a business. It’s an essential part of our economy, and the S Corporation Association supports it,” said Brian Reardon,President, S Corporation Association.
“NECA thanks Representative Buchanan for his commitment to the small business community and urges the swift passage of H.R. 1778. We look forward to working with Congress to advance this measure and fully unlock America’s infrastructure and energy potential,” said Marco A. Giamberardino, MPA, Senior Vice President of Government and Public Affairs, National Electrical Contractors Association.
“Small businesses incur significant startup costs in their first year of operations, yet they can deduct only a small fraction of these costs from their taxable income. The American Innovation Act helps address this issue by increasing the deductible amount to $20,000, raising the phase-out threshold of the deduction to $120,000, and making partnerships and S corporations eligible to claim the deduction. Representatives Vern Buchanan and Mike Kelly should be applauded for leading this pro–small business legislation, which should be supported and co-sponsored by all members of the House of Representatives,” said Alex Hendrie, Vice President of Government Relations, National Association of Wholesaler-Distributors.
“Representative Buchanan’s American Innovation Act would strengthen the entrepreneurial ecosystem by modernizing and expanding the startup cost deduction, giving founders greater flexibility to invest in their teams, operations, and local communities from day one. Venture capital is committed to backing founders who turn innovative ideas into high-growth companies, and NVCA is proud to support legislation that expands access to capital and reduces early-stage barriers so more founders can build and scale next generation companies in every corner of the country,” said Bobby Franklin,President and CEO, National Venture Capital Association.
“The Angel Capital Association is the leading professional association representing over 14,000 accredited individual investors, angel groups, funds and family offices providing critical early stage capital to entrepreneurs. ACA commends Congressman Buchanan and Congressman Kelly for their reintroduction of the American Innovation Act. Expanding the ability for early stage small businesses to deduct their start-up costs will provide entrepreneurs with a much needed capital boost. The American Innovation Act provides help for start-up companies at their most critical early stage time. As Congress continues to look for ways to support fast-growing USA based innovative companies, this legislation is an important part of the equation,” said Pat Gouhin, CEO, Angel Capital Association.
"Small businesses are the backbone of Main Street America, and smart, pro-growth tax policy remains one of the most effective ways to help them succeed. The American Innovation Act builds on the success of the Working Families Tax Cuts Act by providing additional, targeted tax relief to entrepreneurs and job creators as they launch and expand their businesses. Representatives Vern Buchanan and Mike Kelly should be applauded for leading this pro–small business legislation, which should be supported and co-sponsored by all members of the House of Representatives,” said Thomas Aiello, Senior Director of Government Affairs, National Taxpayers Union.
Buchanan is a respected leader in Florida’s business community and has created thousands of jobs over the course of his career. He previously chaired both the Florida Chamber of Commerce and the Sarasota Chamber of Commerce and currently serves as Vice Chairman of the U.S. House Ways and Means Committee.
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