Decoding the One Big Beautiful Bill Act for Tech Workers

A Continuation of the (2018+) Status Quo… Mostly

You’ve probably heard about the One Big Beautiful Bill Act (OBBBA), the sweeping tax bill that passed on July 4, 2025, which makes permanent many of the changes introduced in 2017’s Tax Cuts and Jobs Act (TCJA). But what does it actually mean for you as a tech worker?

If you’ve got incentive stock options, live in a high-tax state like California or New York, or are planning to take a career break, there’s a lot here that could effect you.

Let’s break down the major changes.

Changes to the State and Local Tax (SALT) Deduction Cap

The SALT deduction cap jumps from $10K to $40K from 2025-2029. But it phases out at a 30% rate for high earners ($500K MAGI, or $250K for married filing separately.)

Good news: If you’re a high-earner in a high-tax state, your tax bill may go down.

Bad news: If your income is high enough, you may not benefit at all.

Bottom Line: The 30% phaseout from $500K to $600K for most filers creates a strong incentive to shift income out of this range.

The sneaky Alternative Minimum Tax risk hiding within the increased SALT deduction cap

At first glance, the OBBBA’s big increase in the State and Local Tax (SALT) deduction cap, from $10K to $40K, seems like great news for high-income tech workers in high-tax states like California or New York.

But here’s the catch: SALT deductions reduce your regular tax liability, not your Alternative Minimal Tax (AMT) liability.

This creates a second-order consequence:

The more you deduct in SALT, the bigger the spread between your regular and AMT tax liability—making it more likely that AMT kicks in.

For tech workers exercising incentive stock options (ISOs), this is especially critical. ISO exercises often trigger AMT in the first place, and now a bigger SALT deduction could push you even deeper into AMT territory, wiping out the benefit of that shiny new deduction.

Planning tip: If you’re considering a large ISO exercise in a high-tax state, model both your regular and AMT tax outcomes. That $40K deduction might not help as much as it seems, and it could even complicate your strategy.

AMT Exemption: Still a big shield, but now a steeper cliff

The Tax Cuts and Jobs Act (TCJA) made AMT less punishing for many households by:

• Raising the amount of income you can exempt from AMT, and
• Increasing the income threshold where the exemption starts to phase out.

This meant fewer people were subject to AMT, even if they triggered it with things like ISO exercises or high SALT deductions.

But the OBBBA quietly makes the phaseout steeper starting in 2026:

The phaseout rate for the AMT exemption increases from 25% to 50%, meaning the exemption disappears twice as fast once your income hits the phaseout range.

For tech workers with large equity exercises or multiple AMT triggers, this means:

• More income gets exposed to AMT, and
• The tax difference between the AMT and regular systems can widen faster.

It’s one more reason to model out AMT impacts carefully—especially if you’re sitting on unexercised ISOs or planning a big liquidity event.

QSBS gets a makeover

Qualified Small Business Stock (QSBS) lets startup employees, founders, and early investors potentially exclude up to 100% of federal income tax normally due on capital gains on the sale of certain stock… if they meet key criteria like a 5-year holding period. It’s one of the most powerful tax breaks in the startup world, and the OBBBA just made some important updates to how it works going forward for QSBS-eligible stock acquired after July 4, 2025.

• Exclusion limit raised: $10M → $15M
• Tiered exclusion system:
• • 3+ years: 50% exclusion
  • 4+ years: 75% exclusion
  • 5+ years: 100% exclusion
• Eligibility threshold raised: Companies with assets up to $75M now qualify (was $50M)

TL;DR: Your future startup equity is more likely to qualify for even more favorable treatment under QSBS.

Big changes to ACA health insurance costs

If you’re between jobs and relying on the ACA health insurance marketplace, heads up:

• The expanded ACA subsidies under the American Rescue Plan Act (ARPA) and Inflation Reduction Act (IRA) are sunsetting.
• Premiums will again be capped at 9.6% of income (was 8.5% under ARPA/IRA).
• Premium Tax Credit eligibility returns to only those at 100%-400% of Federal Poverty Level.

Impact: Many paying for their own health insurance under the ACA will effectively undergo a large increase in their premiums.

For further details

If you want a deeper dive into the changes made by the One Big Beautiful Bill Act, I hosted a webinar that I’ve since uploaded to YouTube that walks through the key details. You can also check out the slides from the session for a more visual breakdown.

For those who might be curious about the first-time homebuyer benefit question: It turns out the first-time homebuyer tax credit was proposed in the House version of the OBBBA but never made it into the final bill. The OBBBA does, however, newly allow for the deduction of PMI premiums paid on conventional or FHA mortgages starting in 2026, but this benefit phases out from $100K-$110K AGI except for those married filing separately.