# 119-hr-1199: Small Business Investment Act of 2025

119-hr-1199, Small Business Investment Act of 2025, is a 119th Congress bill sponsored by Rep. Kustoff, David [R-TN-8] (R-TN); status introduced; PRIA reads it as touching household money (as of 2026-06-03).

- Canonical: https://policyrisk.com/legislation/119-hr-1199
- As of: 2026-06-03
- Plain-text twin of the page above; the HTML and this file carry the same facts.

## Facts
- Bill: 119-hr-1199
- Congress: 119
- Title: Small Business Investment Act of 2025
- Status: introduced
- Introduced: 2025-02-11
- Sponsor: Rep. Kustoff, David [R-TN-8] (R-TN)
- Cosponsors: 0
- Policy area: Taxation
- Touches household money: yes
- Last recorded action: 2026-06-03

## Summary

**Expands and speeds up the small-business stock capital-gains exclusion.** This bill would let more investors exclude more gain sooner, add holding-period credit for converted debt, and extend the exclusion beyond C corporations. - Small business investors and founders would get a tiered exclusion based on how long they hold qualifying stock. Holding at least 3 years would yield a 50% exclusion, 4 years a 75% exclusion, and 5 years or more a 100% exclusion. - Holders of qualified convertible debt who convert without recognizing gain would get holding-period tacking. Time holding the debt would count toward the stock holding requirement making it easier to qualify for the exclusion. - Owners of S corporations and other non-C corporations would be able to use the exclusion. The bill adds aggregation rules for S corporations and says gains excluded under this rule are not subject to passive loss limits on disposition.

## Provisions PRIA read

- Bigger tax break for small business stock: benefit, high. If enacted, your small business stock gain exclusion would rise the longer you hold the stock. Hold at least 3 years = 50% excluded; 4 years = 75%; 5 years or more = 100%. The minimum holding time to qualify would drop to 3 years. If you convert qualifying convertible debt to stock without recogniz…
- S corporation stock could qualify for exclusion: benefit, medium. If enacted, stock in S corporations could count as qualified small business stock. For S corporations, the active business test would be applied at the corporate level. Ownership in S corporations would count when checking controlled‑group limits. These changes would apply to stock acquired after e…
- Pre-2010 small business stock tax rule: benefit, low. If enacted, a special rule would treat excluded gains as not a tax preference only for stock acquired on or before the enactment date of the Creating Small Business Jobs Act of 2010. It would apply as if it had been part of that 2010 law. This mainly preserves favorable treatment for that older gro…

## Related bills

- 119-hr-3151: SHIPS for America Act of 2025
- 119-hr-4669: FEMA Act of 2025
- 119-hr-137: TCJA Permanency Act
- 119-hr-2782: Small Business Taxpayer Bill of Rights Act of 2025
- 119-hr-2725: Affordable Housing Credit Improvement Act of 2025
- 119-hr-1229: United States-Israel Defense Partnership Act of 2025

## Sources
- [119-hr-1199 on Congress.gov](https://www.congress.gov/bill/119th-congress/house-bill/1199)

## Related
- [119-hr-3151: SHIPS for America Act of 2025](https://policyrisk.com/legislation/119-hr-3151)
- [119-hr-4669: FEMA Act of 2025](https://policyrisk.com/legislation/119-hr-4669)
- [119-hr-137: TCJA Permanency Act](https://policyrisk.com/legislation/119-hr-137)
- [119-hr-2782: Small Business Taxpayer Bill of Rights Act of 2025](https://policyrisk.com/legislation/119-hr-2782)
- [119-hr-2725: Affordable Housing Credit Improvement Act of 2025](https://policyrisk.com/legislation/119-hr-2725)
- [119-hr-1229: United States-Israel Defense Partnership Act of 2025](https://policyrisk.com/legislation/119-hr-1229)
- [All bills in Congress](https://policyrisk.com/legislation)

Source: PRIA, https://policyrisk.com/legislation/119-hr-1199 (as of 2026-06-03).