Congressman Kustoff Introduces the Small Business Investment Act
WASHINGTON, D.C. — Congressman David Kustoff (R-TN) recently introduced the Small Business Investment Act of 2025 in the House of Representatives. The Small Business Investment Act will make it easier for small businesses to access the financing they need to grow and succeed in today’s economy. Specifically, this bill would expand IRC Section 1202 eligibility to more businesses, make it easier and cheaper for businesses to raise capital, and give businesses more flexibility in their 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 was endorsed by the 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.
“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,” said Angel Capital Association CEO Patrick Gouhin.
“QSBS has a proven track record of promoting long-term investment in high-risk startups across our nation,” said NVCA President and CEO Bobby Franklin. “NVCA is proud to support Congressman Kustoff’s Small Business Investment Act, which would ensure this critical tax incentive continues to help drive innovation and economic growth.”
Background:
Section 1202 of the federal tax code, also known as the Qualified Small Business Stock (QSBS) Gain Exclusion, allows Americans to invest in certain startup businesses tax free. This helps new businesses attract investors and raise the funds they need to survive and grow. Since it was enacted in 1993, Section 1202 has been an effective tool for incentivizing domestic investment and spurring job creation, innovation, and entrepreneurship. Building upon this important provision, and making it easier for small businesses to utilize, will grow our economy and help keep America the innovation capitol of the world.
Click here to read the full text of the bill.
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