The American Innovation Act of 2026 modifies tax rules to encourage new business creation by simplifying deductions for startup and organizational expenses. The bill allows businesses to immediately deduct up to $20,000 in startup costs in their first year, with additional costs spread over 15 years, and adjusts these amounts annually for inflation beginning in 2027. The legislation also protects startup businesses from losing tax deductions and credits during ownership changes by exempting net operating losses and tax credits generated during a company's first three years from limitations that normally apply when a business changes hands. These provisions apply to businesses that begin operations after December 31, 2025, and the ownership change protections apply to tax years ending after January 31, 2025. The bill consolidates and streamlines various tax code sections related to organizational expenses while maintaining safeguards for certain types of business transactions.
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