American Innovation Act of 2025
Sponsored By: Representative Buchanan
Introduced
Summary
This bill would reshape how new businesses treat start-up and organizational costs by letting founders take a larger immediate deduction and by protecting start-up losses and credits during ownership changes. It creates an easier election to deduct early costs and clarifies how those costs, losses, and credits work across entity types and ownership transitions.
Show full summary
- Startups and founders: A taxpayer could elect to deduct up to $20,000 of start-up and organizational expenditures in the year the business begins, phased out when total start-up costs exceed $120,000. Any remaining costs would be capitalized and amortized over 180 months, and the $20,000/$120,000 amounts are inflation adjusted after 2026.
- Pass-throughs and single-owner entities: Partnerships and S corporations must make the deduction election at the entity level. Single-owner disregarded entities are treated like corporations for applying the rule.
- Ownership changes, losses, and credits: The bill adds special rules to preserve and allocate start-up net operating losses and unused general business credits during ownership changes using ratio-based calculations tied to a start-up period of roughly the first 3 years. Transition rules exclude start-ups that begin on or before January 31, 2026.
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Bill Overview
Analyzed Economic Effects
3 provisions identified: 1 benefits, 2 costs, 0 mixed.
Bigger first-year startup cost deduction
If enacted, new businesses could elect to deduct up to $20,000 of startup and organization costs in the first year. That $20,000 would shrink dollar-for-dollar when total costs exceed $120,000. You would spread any remaining costs evenly over 180 months, starting when the business begins. Partnerships and S corps would make the election at the entity level; a single‑owner LLC would be treated like a corporation. The $20,000 and $120,000 amounts would rise with inflation for tax years starting after Dec 31, 2026. These rules would replace the old organization expense provision and apply for tax years beginning after Dec 31, 2025. If you fully liquidate or fully dispose of the business, some amounts not deducted here could be claimed as a loss if allowed under existing loss rules.
No tax write-off for syndication fees
If enacted, partnerships and their partners could not deduct fees paid to market or sell partnership interests (syndication or promotion fees). This would raise taxable income for affected partnerships and partners. The change would apply to tax years beginning after Dec 31, 2025.
Tighter limits on startup losses after sales
If enacted, companies that change owners would face tighter limits on using startup‑period tax losses and credits. After an ownership change, net operating losses from startup years would be reduced by the share tied to the startup trade or business. Unused general business credits from startup years would also be reduced by a matching share. These rules would apply to tax years ending after Jan 31, 2025, and would not apply if the trade or business begins on or before Jan 31, 2026. Allocation and continuity rules similar to current law would apply, with some exceptions such as certain insolvency cases.
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Sponsors & CoSponsors
Sponsor
Buchanan
FL • R
Cosponsors
Kelly (PA)
PA • R
Sponsored 3/3/2025
Smith (NE)
NE • R
Sponsored 3/3/2025
Estes
KS • R
Sponsored 3/3/2025
Miller (WV)
WV • R
Sponsored 3/3/2025
Miller (OH)
OH • R
Sponsored 3/3/2025
Mackenzie
PA • R
Sponsored 3/18/2025
Kustoff
TN • R
Sponsored 2/10/2026
Moore (UT)
UT • R
Sponsored 2/20/2026
Fleischmann
TN • R
Sponsored 2/23/2026
Carter (GA)
GA • R
Sponsored 2/23/2026
Tenney
NY • R
Sponsored 2/23/2026
Bacon
NE • R
Sponsored 2/23/2026
Carey
OH • R
Sponsored 3/3/2026
Lawler
NY • R
Sponsored 3/3/2026
Kiggans (VA)
VA • R
Sponsored 3/3/2026
Webster (FL)
FL • R
Sponsored 3/3/2026
Moran
TX • R
Sponsored 3/16/2026
Yakym
IN • R
Sponsored 3/24/2026
Roll Call Votes
No roll call votes available for this bill.
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