Legislation to quadruple tax deductions for small businesses would ensure those businesses can create jobs, advance innovation and invest in communities, law makers said.
The “American Innovation Act” would remove some of the initial barriers to creating a business, officials said. Introduced by U.S. Reps. Vern Buchanan (R-FL) and Mike Kelly (R-PA), the legislation would increase the amount of start-up costs small business owners can deduct from their federal income taxes to $20,000, up from $5,000. Additionally, the bill increased the threshold for deductions from $50,000 to $120,000 for start-up expenditures like advertising, employees’ salaries and benefits, rent and utilities for new office space.
“Helping entrepreneurs take their unique ideas from concept to reality will jumpstart our economy and give them a deserved shot at the American Dream,” Buchanan said. “As Congress prepares to address historic tax legislation, we need to focus on making it easier for small businesses to do that what they do best—create jobs, advance innovation and invest back into our communities.”
According to the Small Business Administration about half of all start-up businesses fail within the first five years. Officials said the bill aims to support small start-ups by decreasing their tax burden and giving them more capital to invest in their business.
“The American Innovation Act allows for investments in research and development to help small businesses grow and allow entrepreneurs to take that next step in their American Dream,” Kelly said. “This pro-growth tax policy will kickstart our small businesses, and it make it easier for these businesses to create jobs, support families, and grow our local economies.”
The legislation is also cosponsored by U.S. Reps. Ron Estes (R-KS), Carol Miller (R-WV), Max Miller (R-OH), and Adrian Smith (R-NE).