Sponsor
Marsha Blackburn
Senator · R-TN
Official title: Amend the Internal Revenue Code of 1986 to promote new business innovation, and for other purposes.
Introduced March 25, 2026 by Marsha Blackburn · Last progress March 25, 2026
The bill gives new and recent small businesses faster, more predictable tax relief (bigger immediate deductions, amortization, and transition protections) while increasing near-term federal revenue costs and adding complexity — and it tightens rules on ownership changes that can both protect the tax base and raise taxes or compliance burdens for buyers of affected firms.
Small-business owners can immediately deduct up to $20,000 of start-up and organizational costs (phased out above $120,000), lowering first-year tax bills and improving early cash flow.
Businesses can amortize remaining start-up and organizational costs over 180 months, giving new firms predictable multi-year tax relief and smoother expense recognition.
Businesses that began before Feb 1, 2026 keep full access to their net operating losses (NOLs) and credits after ownership changes, protecting existing startups from retroactive loss of tax attributes.
Higher upfront deductions for start-up costs reduce federal tax revenue and could widen the deficit unless Congress offsets the cost.
Businesses that undergo ownership changes after Jan 31, 2026 risk losing some NOL carryforwards and unused start-up-related credits, increasing taxable income for new owners and reducing available tax offsets.
New allocation rules, continuity tests, and transition calculations add complexity and compliance costs for corporate taxpayers and increase administrative burden for the IRS.
Based on analysis of 3 sections of legislative text.
Consolidates startup/organizational expense rules into IRC §195, raises immediate deduction to $20,000 (phased out over $120,000), amortizes the rest over 180 months, and limits post‑change use of start‑up NOLs and credits.
Senator · R-TN
Consolidates and expands federal tax rules for startup and organizational expenditures, raising the immediate deduction and simplifying how new businesses deduct or amortize start-up costs. It also limits the ability to preserve and use start-up-period net operating losses (NOLs) and unused general business credits after an ownership change by creating carve-outs that reduce transferable losses and credits that are attributable to a business’s start-up period. The bill redesigns IRC section 195 as the main start-up/organizational-expense rule, increases the immediate deduction to $20,000 (phased out over $120,000 of expenditures) with the remainder amortizable over 180 months, sets entity-level elections for pass-throughs, treats single-owner disregarded entities like corporations for these rules, and adds inflation adjustments and transition dates. It also adds new limitations to sections 382 and 383 to deny use of NOLs and credits that are allocable to start-up-period losses/credits after an ownership change, with specified exceptions and transition rules.