American Innovation Act of 2025

Simplifies how new businesses deduct start-up and organizational costs and protects some start-up tax losses and credits after major ownership changes. It lets a new business immediately deduct up to $20,000 of eligible start-up/organizational expenses (phasing out as total costs exceed $120,000), with the rest spread evenly over 180 months. It clarifies definitions and how elections work for disregarded entities, partnerships, and S corporations.

It also preserves part of net operating losses (NOLs) and business credits that arose during a defined start-up period when a company’s ownership changes, so fewer of those tax benefits are lost. The start-up expense rules apply to businesses beginning after 12/31/2025, and the NOL/credit rules apply to tax years ending after 1/31/2025.