Small Business Investment Incentive Act

Small Business Investment Incentive Act - Amends the Internal Revenue Code to permit an individual income tax deduction not exceeding $25,000 per year ($50,000 for joint returns) of amounts paid or incurred to purchase stock under the qualified stock purchase plan of a small business corporation (excluding S corporations and personal service corporations) actively engaged in a trade or business.

Prescribes criteria to be met by a qualified stock purchase plan, including: (1) an aggregate $300,000 limit on stock to be sold; (2) requirements that all stock be purchased with cash and that all proceeds from stock purchases be used in conducting the business of the corporation; (3) limitations as to who may purchase stock; and (4) a three-year prohibition on both distributions by the corporation and shareholder transfers of stock.

Establishes special rules with respect to the stock, including rules to govern the taxation of capital gains and relevant basis adjustments.

Allows the exclusion from adjusted gross income of the amount permitted as an income tax deduction for these small business stock purchases.