U.S. Sen. Marsha Blackburn (R-TN) on March 25 sponsored legislation that would expand tax incentives to offset startup costs and remove initial barriers for creating new businesses.
The American Innovation Act of 2026, S. 4207, aims to promote new business innovation by quadrupling the amount of startup costs small business owners can deduct in the first year, raising it from $5,000 to $20,000; increasing the phase-out threshold for deductions from $50,000 to $120,000; and allowing partnerships and S corporations to take advantage of the deduction.
“Entrepreneurship is the beating heart of the American dream and we must remove barriers that prevent hard-working Americans from launching their own businesses,” Sen. Blackburn said. “The American Innovation Act would help Tennesseans invest in their own communities by kickstarting small businesses, supporting families, and growing our local economies.”
S. 4207 is companion legislation to the same-named H.R. 1778 introduced in March 2025 by U.S. Reps. Vern Buchanan (R-FL) and five other Republicans. The House version remains under consideration by the U.S. House Ways and Means Committee, while S. 4207 has been referred to the U.S. Senate Finance Committee for action.
The bill has garnered support from the Small Business & Entrepreneurship Council.