Harris Proposes $50,000 Small Business Tax Deduction For Startup Expenses: Here’s What To Know

Topline

Vice President Kamala Harris proposed Wednesday a substantial boost to the tax deductions new small businesses can use on their startup expenses, tacking on to a tax-focused economic plan she has revealed more of in recent weeks.

Key Facts

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What Is The Current Small Business Tax Deduction?

Small businesses can use the $5,000 deduction and then spread remaining startup costs over 15 years, according to The Wall Street Journal. Startup costs eligible for tax deductions include advertisements, pay for employees in training and for those who instruct them, consultant and executive salaries and travel for securing customers, suppliers or distributors, according to the IRS.

How Many Businesses Could This Impact?

Harris is aiming to attract 25 million new small business applications in her first term if elected president. President Joe Biden’s administration announced Tuesday there have been 19 million new small business applications since the start of the president’s term.

What Are Harris’ Broader Plans For The Economy?

The vice president has pitched an “opportunity economy” focused on supporting the middle class. Like the startup expense tax deduction, she is also looking to expand the child tax credit with a proposal including $6,000 for newborns up to the age of one and $3,600 per child in middle- and lower-income families. Harris is also looking to introduce tax cuts for middle class Americans, reduce “price gouging” at grocery stores and implement up to $25,000 in down payment aid for first-time homebuyers.

Key Background

Harris’ proposal comes just one week ahead of her scheduled debate with former President Donald Trump, who has proposed the extension of expiring tax cuts for people at all income levels, the Journal reported, noting his plans include extending a 20% deduction for small and large businesses. Harris has an edge on Trump in at least nine polling surveys following the Democratic National Convention, including a four-point lead among registered voters on the former president in an Ipsos/ABC News poll taken Aug. 23-27.

Further Reading

Harris Will Propose $25,000 In Down Payment Aid For First-Time Homebuyers As Part Of Economic Agenda (Forbes)

What We Know About Kamala Harris’ Policy Agenda After CNN Interview (Forbes)