Vice President Kamala Harris has proposed a significant expansion of the tax deduction for small business start-up expenses, a policy that closely mirrors a Republican initiative supported by President Donald Trump in 2018. Harris’s plan would increase the deduction from $5,000 to $50,000, aiming to boost small business creation.
In 2018, Rep. Vern Buchanan (R-FL) introduced legislation that sought to raise the deduction to $20,000 as part of the broader “Tax Reform 2.0” package, which followed the Trump tax cuts of 2017. The bill passed in the House with unanimous support from Republicans but was opposed by most Democrats. The Trump administration strongly supported the measure, arguing it would provide critical support to small businesses.
Under current tax law, small businesses can deduct expenses such as advertising and salaries incurred before the business officially opens, but the deduction is capped at $5,000. Harris’s proposal would expand this deduction tenfold, making it easier for entrepreneurs to manage start-up costs.
Harris is expected to announce this proposal in New Hampshire as she pushes her agenda to see 25 million new small businesses launched during her first term. This goal is ambitious compared to the 19 million small businesses started under President Joe Biden’s administration so far.
This proposal is part of Harris’s broader strategy to distance herself from some of the Biden administration’s economic policies, which have been criticized as being unfavorable to businesses. In recent weeks, Harris has voiced support for ending the taxation of tips for service workers, a proposal originally introduced by Donald Trump, and has revised her stance on fracking, now opposing a ban she once supported.
