Rep. Bruce Braley (IA-01) introduced legislation today that seeks to expand a popular tax deduction for small business startup expenses.
Current law allows entrepreneurs starting a small business to claim a $5,000 income tax deduction when total startup business costs do not exceed $50,000. Braley's Support Our Startups Act would expand that deduction to $10,000, and raise the cap on total startup expenses to $60,000.
Braley said, "Small businesses have generated 65 percent of new jobs in the United States over the last 17 years. If our economy is going to create new jobs, it's going to start with small business growth.
Braley continued, "That's why we need to give potential small business owners the tools they need to turn their dreams into reality. Economic uncertainty is keeping good ideas grounded on the launching pad. The Support Our Startups Act will give entrepreneurs greater incentives to get their business ideas off the ground."
Christian Renaud, Principal at Startup City Des Moines, praised the bill, saying: "Every day, I work with entrepreneurs trying to get their big ideas off the ground," "In this economy, the difference between a startup making it and a startup failing is very narrow. More than ever, entrepreneurs need to use every tool in their arsenal to make their business successful. This expanded tax break could be a difference-maker for countless new startups. It's an extra shot of adrenaline for entrepreneurs working to get their small business up and running."
The Support Our Startups Act limits benefits to small businesses entrepreneurs by capping the startup expenses eligible for the credit at $60,000. Expenses over that amount reduce the potential deduction, meaning large businesses, big corporations, or major investors would likely be ineligible for the tax cut.
According to the US Small Business Administration, small businesses make up over 99 percent of all businesses in the United States and employ half of all private sector employees.
An annual report released by the nonprofit Kaufman Foundation in March showed that the national rate of small business startups dropped 5.9 percent between 2010 and 2011, from an estimated 565,000 new businesses opening per month to 543,000 new businesses opening per month. The report also showed that Iowa has one of the lowest entrepreneurship rates in the country.