Sponsors (19)
The bill accelerates and clarifies tax relief for many small startups—giving targeted immediate deductions and preserving certain carryforwards—while capping and phasing those benefits, adding transfer/timing limits, and creating new compliance and cost risks for mid‑sized startups, partnerships, and businesses that change owners.
Small-business owners can immediately deduct up to $20,000 of start-up and organizational costs (with amounts above that amortized over 180 months) and the $120,000 (inflation‑adjusted) phaseout focuses the upfront relief on smaller startups.
Corporations (startups beginning after Jan 31, 2026) can preserve net operating loss carryforwards and unused general business credits after an ownership change, increasing future tax relief for businesses that change owners.
Taxpayers (including sole proprietors using single‑member LLCs, partnerships, and S corporations) benefit from clearer application rules (single‑owner treatment, entity‑level election requirement, and defined start‑up/credit allocation rules) that reduce ambiguity, IRS disputes, and inconsistent claims.
Small-business owners and startups with start‑up costs above the $20,000 cap receive limited immediate relief and must amortize excess costs over 15 years, and the dollar‑for‑dollar phaseout beginning at $120,000 can materially blunt benefits for mid‑sized startups near that threshold, reducing near‑term cash flow.
Taxpayers and small businesses face unequal timing and transfer rules: benefits and exceptions only apply to businesses beginning after Jan 31, 2026, and tighter continuity/insolvency tests for ownership changes can disqualify relief, creating discontinuities, disadvantaging pre‑2026 startups, and risking loss of tax benefits on sales/transfers.
Partnerships that paid placement or promotion (syndication) fees will face higher tax costs because the bill denies partnership deductions for those syndication fees.
Based on analysis of 3 sections of legislative text.
Allows up to $20,000 immediate deduction for start‑up costs (phased out over $120,000), amortizes the remainder over 180 months, and preserves certain start‑up NOLs/credits after ownership changes.
Introduced March 3, 2025 by Vernon G. Buchanan · Last progress March 3, 2025
Changes how new businesses deduct start‑up and organizational costs by allowing an immediate election to deduct up to $20,000 (phased out dollar‑for‑dollar above $120,000) and amortizing remaining amounts over 180 months once the business begins. It also creates rules that preserve portions of start‑up net operating losses and unused business tax credits after ownership changes for losses/credits that arose during a defined start‑up period, subject to continuity and insolvency limits. The bill treats single‑owner disregarded entities like corporations for these rules, requires entity‑level elections for partnerships and S corporations, disallows partnership deductions for syndication fees, updates related cross‑references in the tax code, and includes effective dates and inflation adjustments for the deduction amounts.