Sponsors
The bill gives many new businesses near‑term tax relief and greater predictability for carryforwards across ownership changes, while creating delayed relief for larger start‑up spenders, potential revenue loss, and added complexity and transition risks that may advantage some firms over others.
Small-business owners can deduct up to $20,000 of start‑up and organizational costs in the year a business begins (with thresholds inflation‑indexed after 2026), reducing first‑year taxable income and improving early cash flow for many new firms.
Start‑up costs that exceed the immediate deduction can be amortized over 180 months, giving small businesses predictable multi‑year tax treatment and smoother expense recovery.
Start‑up corporations and acquiring firms can preserve unused net operating loss (NOL) carryforwards and general business credits after ownership changes, increasing available tax relief when businesses are bought or recapitalized.
Businesses with start‑up costs above the statutory threshold (and previously nondeducted start‑up costs that are only deductible on complete liquidation) face delayed tax relief and worse first‑year cash flow, because excess costs must be amortized or only recognized on disposition.
Allowing preserved NOLs and credits to remain usable by post‑change owners likely reduces corporate tax revenues, which could increase budget deficits or shift tax burdens elsewhere.
Moving rules (e.g., eliminating section 248 and consolidating provisions) and new continuity/proration limits introduce transition and compliance complexity, raising costs for businesses, advisors, and tax administration.
Based on analysis of 3 sections of legislative text.
Increases and simplifies immediate start-up/organizational deductions, indexes thresholds, requires amortization of remaining costs, and preserves some start-up NOLs/credits after ownership changes.
Introduced March 25, 2026 by Marsha Blackburn · Last progress March 25, 2026
Allows many new businesses to deduct more start-up and organizational costs right away and protects some start-up losses and unused business credits when ownership changes. It raises the immediate start-up/organizational deduction to $20,000 (phasing out above $120,000), requires amortization of remaining costs over 180 months, treats certain single-owner entities as corporations for these rules, and creates a narrow exception that preserves portions of net operating loss and general business credit carryforwards that arose during a business’s start-up period when an ownership change would otherwise reduce them.