Big Story: Tax reform efforts moves to the Senate
All eyes are on the Senate as policymakers prepare to release their version of a sweeping tax rewrite that will touch on AI, connectivity, and tax treatments that help incentivize entrepreneurship, innovation, and startup investment. While the Senate Committee on Commerce, Science, and Transportation released its part of the reconciliation package, which touches on AI, broadband funding, and spectrum auction authority, the Senate Finance Committee is working to finalize the tax reform proposals to be considered by the upper chamber. As Congress continues down the path to reconciliation,it’s essential that lawmakers advance policies that catalyze innovation, spur investment, and expand opportunity across the startup ecosystem.
Last month, the House passed its version of the budget reconciliation package, advancing a suite of proposals that would, among other things, restore immediate expensing of domestic R&D costs and extend opportunity zones with a focus on rural investment. The Senate Finance Committee is expected to release its version of the tax package by early next week, with Republicans aiming to finalize a sweeping legislative deal before the July 4 deadline. As negotiations continue, the startup ecosystem is watching to see whether the Senate’s version mirrors the House-passed bill. The House version also included provisions to make it easier for people to join the startup ecosystem, including an expanded Child Tax Credit, incentives for employer-subsidized child care, and continued key provisions from the 2017 tax law. Engine—and many startups—have long called for a tax framework that helps early-stage companies stretch limited budgets and attract investment, as well as measures that clear barriers to innovation.
While the House advanced a decade-long ban on enforcement of state AI laws, the Senate’s version took a different route, tying billions of federal dollars in broadband funding to a state’s agreement not to enforce its AI laws. Policymakers should work to prevent a fragmented landscape of AI rules that threaten innovation, while moving quickly to restore the Federal Communications Commission’s lapsed spectrum auction authority, unlocking hundreds of megahertz in federal spectrum that startups rely on to scale wireless tools and expand access to the bandwidth needed to reach users.
Policy Roundup:
New York passes bill regulating AI models. The New York State Legislature on Thursday passed the RAISE Act, a bill regulating the development of AI models, including those startups leverage to build novel services. The bill threatens to undermine startups’ access to the tools they use, raise costs, and dampen innovation, and a similar bill that passed in California last year was vetoed by that state’s governor.
BEAD changes risk leaving startups behind. The National Telecommunications and Information Administration revised the $42.5B Broadband Equity, Access, and Deployment program last Friday. Key provisions were dropped and the program was reshaped—two years into its rollout—undermining efforts to close the digital divide. The rewrite disrupts years of planning and puts startups in underserved areas at risk of losing the reliable Internet they need to build and scale their companies.
ACCESS Act reduces early fundraising regulations. The House Financial Services Committee advanced several bills for consideration this week, including the ACCESS Act, which raises the reporting requirement for crowdfunding from $100,000 to $250,000. Crowdfunding can be a critical fundraising tool for early stage start-ups; by expanding the reporting exemption policymakers can alleviate regulatory costs during a critical growth phase.
House Science Committee advances small business AI support bill. The House Science, Space, and Technology Committee advanced the bipartisan Small Business Artificial Intelligence Advancement Act on Thursday, which would direct the National Institute of Standards and Technology to develop tools to help small businesses better understand and adopt AI. The measure aims to provide guidance for startups and promote uptake of AI.
Bill advances expanding consideration of rule impacts on startups. The House voted the Small Business Regulatory Flexibility Improvements Act of 2025 out of the Judiciary Committee this week, which would broaden the types of impacts on small businesses, including startups, that federal agencies must consider as they write new rules. The bill would require agencies to consider indirect impacts, which should be a critical factor as regulators weigh policy changes.
Senate Judiciary advances STOP CSAM Act. The Senate Judiciary Committee voted to advance the STOP CSAM Act on Thursday, a bill that would allow victims of child sexual abuse material (CSAM) to sue Internet platforms that hosts or stores such content, even unknowingly. In a letter this week, digital rights groups warned that the bill would harm platforms’ ability to offer privacy and security tools, like encryption, which prevents platforms from being able to search users’ private content.
Startup Roundup:
#StartupsEverywhere: Buffalo, New York. With a career in waste management and recycling, Sashti Balasundaram knew he was ready to make a deeper change. He created WeRadiate, a company focused on soil health using organic recycling technology and data. We sat down with Sashti to discuss his product, manufacturing, the startup ecosystem, and more.
