Vice President Kamala Harris has proposed expanding the tax deduction for small business start-up expenses, aligning her policy with a Republican-led initiative from six years ago that was supported by President Donald Trump. Harris’s plan calls for increasing the deduction from $5,000 to $50,000, significantly boosting the financial support available to new entrepreneurs.
This proposal mirrors a 2018 bill introduced by Rep. Vern Buchanan (R-FL), which aimed to raise the deduction to $20,000 as part of the “Tax Reform 2.0” package. The bill passed the House with unanimous Republican backing and the endorsement of the Trump administration, but it was met with opposition from most Democrats, who argued that such tax breaks mainly benefit wealthier business owners.
Under the current tax code, small business owners can deduct certain expenses, including advertising and salaries, before their business officially begins operations. However, this deduction is capped at $5,000. Harris’s proposal seeks to increase this cap to $50,000, making it easier for entrepreneurs to manage the costs of starting a new business.
Harris is expected to highlight this proposal in New Hampshire, where she will advocate for the creation of 25 million new small businesses during her first term. In comparison, the Biden administration has seen the establishment of 19 million small businesses to date.
This proposal is part of Harris’s broader effort to distance herself from some of the more progressive policies of the Biden administration, which have been criticized as being unfriendly to businesses. Last month, Harris expressed support for ending the taxation of tips for service workers — a policy initially proposed by Donald Trump — and has recently revised her stance on fracking, now opposing a ban she once supported.
