R&D, QSBS still in play for tax bill

Topline

• Tax update: Pressure to pass pro-innovation bill by July 4…but it’s challenging

• House votes to expand accredited investor on-ramps

• Quick hits

Programming note: The normal Policy Weekly will be on break next week given the July 4th holiday. We will circulate a special edition if there are key developments around the tax bill.  But if we don’t see you before then, enjoy the holiday!

Tax bill moving into endgame

The tax bill will get done, but it is a question of content and timing. The president wanted to sign the Big Beautiful Bill Act by July 4, but the policy dynamics and procedural hurdles are making that timeline a challenge.

• Procedure: The Senate bill remains in flux until the parliamentarian determines which policy is eligible to be included (anything that is included must have direct revenue implications under the rules of reconciliation). This means that extraneous policy—that without direct budget implications—gets eliminated (Byrd Rule). The Senate parliamentarian is expected to conclude that assessment today or tomorrow, but she has already ruled a number of key provisions violate the Byrd Rule, creating additional friction as leadership tries to unite support. 

• Policy: Republican leadership continues to navigate policy divisions with the goal of the Senate “pre-conferencing”—or pre-negotiating—a bill with the House that can pass both chambers in the coming days. There are various outstanding issues, but focus areas include the level of cuts to medicaid andthe SALT cap levels, as well as the proposed moratorium on states’ ability to regulate AI, which has divisions in the Republican party.

• Innovator focus: Carta and the Innovator Alliance continue our push to cement gains in the Senate bill, which expands qualified small business stock (QSBS), reinstates immediate expensing for R&D, and maintains the current tax treatment for carried interest. Though we feel confident we have the support on policy, each of these provisions cost money, and as policymakers look to balance spending, they will come under scrutiny. This is why we are staying engaged until it is done. 

Next steps: President Trump has acknowledged the July 4 goal is a challenge and “not the end all.” Expect negotiations to continue with the Senate looking to pass a bill this weekend, followed shortly by the House. If they cannot resolve their differences in the near term, the expectation is that it slips a week, but leaders are keeping the pressure on to pass legislation quickly. 

House advances legislation to expand retail access to private capital

The House overwhelmingly supported legislation to preserve and expand the accredited investor definition, which could unlock new pools of capital and investment opportunities for individuals. The Fair Investment Opportunities for Professional Experts Act would enable individuals with certain licenses and pertinent education or job experience to qualify as an accredited investor. Importantly, the bill would also lock in the current wealth and income-based thresholds in the statute, setting a baseline for any future regulatory efforts to adjust these measures for inflation. 

The House also advanced a number of other capital formation proposals, including legislation to exempt business development companies from fee disclosures, which have caused these funds to be removed from indexes and decreased institutional investor interest.

Why it matters: This slate of capital formation bills—expanding accredited investor on-ramps, in particular—have enjoyed strong bipartisan support and have passed the House several times over the past few Congresses, but they have languished in the Senate. We expect that dynamic to change, and with unified Republican control, there is an opportunity to get these policies signed into law. The key will be bandwidth and ensuring these items remain a priority on the agenda. Strong support in Congress can also help drive action at the SEC.

Quick hits

• Crypto corner

  • House crypto votes planned for July: The House is expected to pass the Senate’s stablecoin framework (GENIUS Act) and its digital asset market structure framework (CLARITY Act) in July, potentially as early as July 7. If the House passes GENIUS as is, President Trump could sign the bill into law shortly thereafter.

  • Movement on Senate market structure: Senate Banking Republicans released crypto market structure principles. The goal is to introduce legislation before August recess and pass the bill before the September fiscal year end. Any deviations from the House’s CLARITY Act would need to be resolved before it could become law. This one will be a little more challenging to advance than stablecoins.

• SEC’s Investor Advocate to focus on retirement access to private markets. The annual report to Congress outlined priorities for 2026, including a focus on the risks and benefits of opening up retirement accounts to private market investments. The office has previously viewed private markets with skepticism, but engagement could help reshape the narrative and reduce scrutiny from policymakers. 

• Efforts to block state AI patchwork face GOP headwinds. A provision in the reconciliation bill that would impose a 10-year moratorium on state and local AI regulations is under fire, with conservatives pushing back over concerns around federalism. Tech industry leaders and venture capitalists have warned that regulatory fragmentation and inconsistent rules across states could harm startups and hinder innovation, allowing China to surpass the U.S. in AI development. 

• US-China trade deal, with others in pipeline, but not Canada. The global trade dynamics remain in flux, with some positive signals emerging but broader dynamics reminding everyone of the fluid nature.

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