PlainBillCongress, translated.Legislation. Context. Public interest.Referred to the House Committee on Ways and Means.
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People & committees
Rep. Buchanan, Vern [R-FL-16] · R–FL
Legislative record
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Referred to the House Committee on Ways and Means.
Introduced in House
Introduced in House
Primary sources
Text links open the official source. We also preserved the text version used in the PlainBill explanation below.
Source last updated: Apr 15, 2026. Consult Congress.gov for the current record.
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PlainBill explanation
Based on the full Introduced in House · 2025-03-03 text. This explanation has not received human editorial review. This overview describes the proposal’s major provisions; it does not establish what its real-world effects would be.
This proposal would let taxpayers choose to deduct up to $20,000 of eligible business start-up and formation costs when a business begins, with a smaller immediate deduction for higher costs and remaining costs deducted over 15 years. It would also create exceptions to ownership-change tax rules for certain early business losses and unused tax credits. Eligibility would depend on business start dates, allocation rules, and continued operation after the ownership change.
the taxpayer shall be allowed a deduction for the taxable year in which such active trade or business begins in an amount equal to the lesser of— (i) the aggregate amount of start-up and organizational expenditures paid or incurred in connection with such active trade or business, or (ii) $20,000, reduced (but not below zero) by the amount by which such aggregate amount exceeds $120,000
the remainder of such start-up and organizational expenditures shall be charged to capital account and allowed as an amortization deduction determined by amortizing such expenditures ratably over the 180-month period beginning with the month in which the active trade or business begins.
Exception for start-up losses
Exception for start-Up excess credits
If the new loss corporation does not continue the trade or business referred to in subparagraph (B)(i) at all times during the 2-year period beginning on the change date, this paragraph shall not apply with respect to such trade or business.
Rules similar to the rules of subparagraphs (C)(ii), (D), (E), and (F) of section 382(d)(4) shall apply for purposes of this subsection.
This subsection shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof) is on or before January 31, 2026.
Section 1 would name the legislation the American Innovation Act of 2025.
This Act may be cited as the American Innovation Act of 2025.
Section 2 would generally prohibit deductions for start-up and organizational costs unless its exceptions apply. A taxpayer could elect to deduct qualifying costs under the proposed rules.
Except as otherwise provided in this section, no deduction shall be allowed for start-up or organizational expenditures.
If a taxpayer elects the application of this subsection with respect to any active trade or business— (A) the taxpayer shall be allowed a deduction for the taxable year in which such active trade or business begins
The proposed immediate deduction would equal eligible costs or the applicable deduction limit, whichever is smaller. The initial $20,000 limit would fall dollar for dollar as total eligible costs exceed $120,000, but could not fall below zero.
an amount equal to the lesser of— (i) the aggregate amount of start-up and organizational expenditures paid or incurred in connection with such active trade or business, or (ii) $20,000, reduced (but not below zero) by the amount by which such aggregate amount exceeds $120,000
Under that election, remaining eligible costs would be recorded as capital costs and deducted evenly over 180 months, or 15 years, starting in the month the active business begins. This gradual deduction is called amortization.
the remainder of such start-up and organizational expenditures shall be charged to capital account and allowed as an amortization deduction determined by amortizing such expenditures ratably over the 180-month period beginning with the month in which the active trade or business begins.
For tax years beginning after December 31, 2026, the proposed $20,000 deduction limit and $120,000 threshold would receive inflation adjustments using 2025 as the reference year under the cited tax-code formula. Adjusted amounts would be rounded to the nearest $1,000.
In the case of any taxable year beginning after December 31, 2026, the $20,000 and $120,000 amounts in paragraph (1)(A)(ii) shall each be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2025 for calendar year 2016 in subparagraph (A)(ii) thereof. If any amount as increased under the preceding sentence is not a multiple of $1,000, such amount shall be rounded to the nearest multiple of $1,000.
Eligible organizational costs would have to be incident to creating a corporation or partnership, chargeable to capital account, and of a type that would be amortizable over an ascertainable lifespan if incurred to create a corporation or partnership with such a lifespan. This hypothetical test describes the type of cost; it does not require the actual entity to have an ascertainable lifespan. For organizational costs, the deduction rules would use the entity's first active business.
The term organizational expenditures means any expenditure which— (A) is incident to the creation of a corporation or a partnership, (B) is chargeable to capital account, and (C) is of a character which, if expended incident to the creation of a corporation or a partnership having an ascertainable life, would be amortizable over such life.
In the case of organizational expenditures with respect to any corporation or partnership, the active trade or business referred to in paragraph (1) means the first active trade or business carried on by such corporation or partnership.
A single-owner entity treated as part of its owner for tax purposes would be treated like a corporation for these proposed cost-deduction rules. Partnerships and S corporations would make the deduction election and apply section 195 at the entity level.
In the case of any entity with a single owner that is disregarded as an entity separate from its owner, this section shall be applied in the same manner as if such entity were a corporation.
In the case of any partnership or S corporation, the election under subsection (b) shall be made (and this section shall be applied) at the entity level.
If a taxpayer completely liquidated a partnership or corporation, otherwise undeducted start-up or organizational costs could be deducted to the extent allowed by tax-code section 165. The proposal would not make those deductions unconditional.
If any partnership or corporation is completely liquidated by the taxpayer, any start-up or organizational expenditures paid or incurred in connection with such partnership or corporation which were not allowed as a deduction by reason of this section may be deducted to the extent allowable under section 165.
If a taxpayer completely disposed of or discontinued a business, otherwise undeducted start-up costs could be deducted to the extent allowed by section 165, excluding costs already taken into account under the liquidation rule. Where an earlier deduction combined start-up and organizational costs, the start-up share would be allocated proportionally.
If any trade or business is completely disposed of or discontinued by the taxpayer, any start-up expenditures paid or incurred in connection with such trade or business which were not allowed as a deduction by reason of this section (and not taken into account in connection with a liquidation to which paragraph (1) applies) may be deducted to the extent allowable under section 165.
in the case of any deduction allowed under subsection (b)(1) with respect to both start-up and organizational expenditures, the amount treated as so allowed with respect to start-up expenditures shall bear the same ratio to such deduction as the start-up expenditures taken into account in determining such deduction bears to the aggregate of the start-up and organizational expenditures so taken into account.
Section 2 would remove tax-code section 248 and revise related references as part of placing organizational costs under section 195. It would also replace section 709 with an express prohibition on deductions by partnerships or their partners for costs of promoting or selling partnership interests.
Part VIII of subchapter B of chapter 1 is amended by striking section 248 of such Code (and by striking the item relating to such section in the table of sections of such part).
Section 312(n)(3) of such Code is amended by striking Sections 173 and 248 and inserting Sections 173 and 195.
Section 709 of such Code is amended to read as follows: 709. Treatment of syndication fees No deduction shall be allowed under this chapter to a partnership or to any partner of the partnership for any amounts paid or incurred to promote the sale of (or to sell) an interest in the partnership.
The proposed section 2 changes would apply to expenditures connected with active businesses that begin in tax years beginning after December 31, 2025.
The amendments made by this section shall apply to expenditures paid or incurred in connection with active trades or businesses which begin in taxable years beginning after December 31, 2025.
Section 3 would create an exception within the ownership-change rules for net operating loss carryforwards—tax losses carried into later years. It would reduce the loss amount otherwise counted under section 382(d)(1)(A) by the qualifying net start-up loss.
Preservation of start-up net operating losses and tax credits after ownership change
In the case of any net operating loss carryforward described in paragraph (1)(A) which arose in a start-up period taxable year, the amount of such net operating loss carryforward otherwise taken into account under such paragraph shall be reduced by the net start-up loss determined with respect to the trade or business referred to in subparagraph (B)(i) for such start-up period taxable year.
A qualifying start-up tax year would have to begin before the end of the business's first three years of active operation and end after January 31, 2026. The loss exception would exclude any business that began active operation on or before January 31, 2026.
The term start-up period taxable year means any taxable year of the old loss corporation which— (i) begins before the close of the 3-year period beginning on the date on which any trade or business of such corporation begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof), and (ii) ends after January 31, 2026.
This paragraph shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof) is on or before January 31, 2026.
The proposed qualifying start-up loss would be a share of the corporation's loss carryforward. That share would reflect the loss attributable to the particular business divided by the corporation's total loss for the year, with the ratio capped at one.
the amount which bears the same ratio (but not greater than 1) to the net operating loss carryforward which arose in such start-up period taxable year as— (I) the net operating loss (if any) which would have been determined for such start-up period taxable year if only items of income, gain, deduction, and loss properly allocable to such trade or business were taken into account, bears to (II) the amount of the net operating loss determined for such start-up period taxable year.
If a qualifying tax year extended beyond the three-year start-up period, the proposed loss exception would be prorated to the portion of that year within the period.
In the case of any start-up period taxable year which ends after the close of the 3-year period described in subparagraph (B)(i) with respect to any trade or business, the net start-up loss with respect to such trade or business for such start-up period taxable year shall be the same proportion of such loss (determined without regard to this clause) as the proportion of such start-up period taxable year which is on or before the last day of such period.
For losses arising in the ownership-change year, the proposal would apply the exception only to the loss and start-up loss allocated to the period covered by section 382(d)(1)(B). It would require an allocation adjustment when the year also extends beyond the three-year start-up period.
Subparagraph (A) shall apply to any net operating loss described in paragraph (1)(B) in the same manner as such subparagraph applies to net operating loss carryforwards described in paragraph (1)(A), but by only taking into account the amount of such net operating loss (and the amount of the net start-up loss) which is allocable under paragraph (1)(B) to the period described in such paragraph. Proper adjustment in the allocation of the net start-up loss under the preceding sentence shall be made in the case of a taxable year to which subparagraph (C)(ii) applies.
If several businesses qualified in the same tax year, the proposed loss exception would be calculated separately for each. The combined reductions could not exceed the loss carryforward for that year.
In the case of any net operating loss carryforward which arose in a taxable year which is a start-up period taxable year with respect to more than 1 trade or business— (i) this paragraph shall be applied separately with respect to each such trade or business, and (ii) the aggregate reductions under subparagraph (A) shall not exceed such net operating loss carryforward.
The proposed loss exception would require the corporation after the ownership change to continue the qualifying business throughout the two years beginning on the change date. Failure to do so would make the exception unavailable for that business.
If the new loss corporation does not continue the trade or business referred to in subparagraph (B)(i) at all times during the 2-year period beginning on the change date, this paragraph shall not apply with respect to such trade or business.
The proposed loss exception would not apply to specified second ownership changes or insolvency transactions governed by section 382(l)(5)(D) or (l)(6). It also would not apply to the carryover of disallowed interest under section 382(d)(3). The supplied text does not reproduce those referenced rules.
In the case of a 2nd ownership change to which subsection (l)(5)(D) applies, this paragraph shall not apply for purposes of determining the pre-change loss with respect to such 2nd ownership change.
If subsection (l)(6) applies for purposes of determining the value of the old loss corporation under subsection (e), this paragraph shall not apply.
This paragraph shall not apply for purposes of applying the rules of paragraph (1) to the carryover of disallowed interest under paragraph (3).
Section 3 would also create an exception for unused general business tax credits from qualifying start-up years. The amount otherwise counted under section 383(a)(2)(A) would be reduced by a start-up share, calculated using credits attributable to the particular business compared with the corporation's total general business credit for that year.
In the case of any unused general business credit of the corporation under section 39 which arose in a start-up period taxable year, the amount of such unused general business credit otherwise taken into account under subsection (a)(2)(A) shall be reduced by the start-up excess credit determined with respect to any trade or business referred to in section 382(d)(4)(B)(i) for such start-up period taxable year.
the amount which bears the same ratio to the unused general business credit which arose in such start-up period taxable year as— (A) the amount of the general business credit which would have been determined for such start-up period taxable year if only credits properly allocable to such trade or business were taken into account, bears to (B) the amount of the general business credit determined for such start-up period taxable year.
The proposed credit exception would use the loss exception's definition of a start-up tax year. It would also apply similar rules for partial years, ownership-change-year allocation, multiple businesses, and continued operation. Businesses beginning active operation on or before January 31, 2026, would be excluded.
For purposes of this subsection, the term start-up period taxable year has the meaning given such term in section 382(d)(4)(B).
Rules similar to the rules of subparagraphs (C)(ii), (D), (E), and (F) of section 382(d)(4) shall apply for purposes of this subsection.
Special rule for last taxable year in start-up period
Application to net operating loss arising in year of ownership change
Application to taxable years which are start-up period taxable years with respect to more than 1 trade or business
Continuity of business requirement
This subsection shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof) is on or before January 31, 2026.
Section 3 states that its amendments would apply to tax years ending after January 31, 2025. That general effective date is separate from the eligibility rules requiring qualifying businesses to begin after January 31, 2026.
The amendments made by this section shall apply to taxable years ending after January 31, 2025.
This paragraph shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof) is on or before January 31, 2026.
This subsection shall not apply with respect to any trade or business if the date on which such trade or business begins as an active trade or business (as determined under section 195(d)(2) without regard to subparagraph (B) thereof) is on or before January 31, 2026.
The supplied official-actions snapshot, updated April 15, 2026, records introduction in the House and referral to the House Committee on Ways and Means on March 3, 2025.
Source snapshot updated 2026-04-15T01:36:32Z. 2025-03-03: Referred to the House Committee on Ways and Means. 2025-03-03: Introduced in House
A closer look
Reviewed version: Introduced in House · 2025-03-03. These findings describe provisions and who may benefit; they are not judgments of waste, corruption, or motive.
This review covers the supplied bill text. “None identified” does not rule out provisions in later versions or accompanying reports and disclosures.
Provisions outside the bill’s main subject, or policy changes attached to appropriations.
None identified in the reviewed text
No unrelated provision or policy change attached to appropriations was identified in the complete supplied introduced text. This conclusion does not establish absence in other versions or accompanying materials.
Spending directed to particular recipients or places outside ordinary competitive or formula-based allocation.
None identified in the reviewed text
No congressionally directed spending for particular recipients or places was identified in the complete supplied introduced text. This conclusion is limited to that version; the supplied materials do not establish formal earmark status or absence in other versions or accompanying materials.
Narrow exceptions, exemptions, or preferential treatment that warrant a closer look.
None identified in the reviewed text
No materially narrow carve-out, special exemption, preferential treatment, or exception warranting a separate targeted-benefit finding was identified in the complete supplied introduced text. Ordinary coverage of the main policy's intended beneficiaries is not treated as preferential treatment. This conclusion does not establish absence in other versions or accompanying materials.
Full text preserved for this analysis. Legislative record snapshot: Apr 15, 2026. How PlainBill uses AI