NW Tennessee News

Congressman David Kustoff has introduced the Small Business Investment Act of 2025 in the House of Representatives. This legislation aims to facilitate access to financing for small businesses, enabling them to grow and thrive in the current economic climate. The bill proposes expanding IRC Section 1202 eligibility, reducing costs for capital raising, and providing businesses with more flexible financing options.

"Small businesses play a critical role in our economy. As such, I am working to ensure they have the ability to grow and employ hardworking Americans," said Congressman Kustoff. "The Small Business Investment Act will help give small business owners the financing and flexibility they need to expand, innovate, and create more jobs. This important legislation is a steppingstone to jumpstarting the U.S. economy and I encourage my colleagues to support it."

The bill has received endorsements from several organizations including Americans for Tax Reform (ATR), Angel Capital Association (ACA), U.S. Chamber of Commerce, Small Business & Entrepreneurship Council (SBE) Council, Engine, Financial Technology Association, National Venture Capital Association (NVCA), CapGains Inc., and Carta.

“ATR commends Rep. Kustoff's efforts to promote capital formation for American entrepreneurs and small businesses. This legislation will move towards a fairer, tiered system while including more assets and taxpayers, especially S-Corps, in tax treatment that will incentivize more investment and economic growth. Lawmakers should support and pass the Small Business Investment Act,” said the Americans for Tax Reform.

Patrick Gouhin from Angel Capital Association remarked on enhancing Section 1202: “Enhancing Section 1202 will strengthen the necessary capital formation that is critical to driving economic growth and innovation throughout the country. Congressman Kustoff understands that private investors have many options and properly incenting both the investor to provide the needed capital and entrepreneurs to take calculated risks in launching new entities is paramount in keeping America economically prosperous and innovative on a world stage. The proposed enhancements do just that.”

Bobby Franklin from NVCA added: “QSBS has a proven track record of promoting long-term investment in high-risk startups across our nation,” expressing NVCA's support for Congressman Kustoff’s act which would ensure continued use of this tax incentive.

Section 1202 of the federal tax code allows Americans to invest tax-free in certain startup businesses through Qualified Small Business Stock (QSBS) Gain Exclusion since its enactment in 1993. It has been an effective tool for encouraging domestic investment while fostering job creation, innovation, and entrepreneurship.

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