You've probably seen the headlines about eliminating taxes on tips and overtime pay. But as a tech employee, those provisions likely won't affect your day-to-day tax situation. What will impact you are the quieter changes buried in the 1,000+ page bill that was signed into law on July 4, 2025.
Let's look beyond the headlines and focus on what actually matters for your tax planning.
The Good: Changes That Could Lower Your Tax Bill ⬇️
Standard Deduction Bump
Small but helpful increases: $750 for single filers, $1,500 for married filing jointly. Not game-changing, but every bit helps.
SALT Deduction (Temporary) Increase
Starting in 2026, the State and Local Tax (SALT) deduction limit temporarily increases to $40,000 (from $10,000) for a few years. While this benefits many taxpayers, approaching the $40k cap may create complexities for the tech community.
The catch: This benefit phases out for those that earn above $500,000 and the cap returns to $10,000 in 2030. For many tech employees in high-tax states like California, and New York, the impact will be less dramatic than expected – more SALT could mean higher income, which reduces the benefit. And a larger SALT deduction could push you closer to AMT, which would limit the SALT deduction in a roundabout way.
Charitable Deductions for Non-Itemizers
If you take the standard deduction, you can now deduct donations up to $1,000 (single) or $2,000 (married filing jointly) starting in 2026. This is actually huge for many tech employees who do not own a home which mostly excluded them from previously deducting their charitable giving.
Enhanced Child Tax Credit
The credit increases to $2,200 per child for 2025 and becomes inflation-adjusted going forward. The income phaseout thresholds remain the same (and aren't inflation-adjusted), so more families may qualify over time.
QSBS: The Startup Employee Jackpot
This is potentially huge for startup employees who acquire Qualified Small Business Stock (QSBS) after July 4, 2025:
Exclusion limit jumps from $10 million to $15 million in federal tax-free gains
Holding period relaxed: You can now get partial exclusions with shorter holding periods
3 years = 50% exclusion
4 years = 75% exclusion
5+ years = 100% exclusion (up to $15M)
Why this matters: If you're joining a startup or your current company is still QSBS-eligible, this change dramatically improves the potential tax benefits of your equity compensation.
The Bad: Changes That Could Increase Your Tax Bill ⬆️
The Charitable Donations Hurdle
Starting in 2026, charitable deductions get much harder to claim if you itemize. Only donations exceeding 0.5% of your income will be counted as itemized deductions.
Real-world impact: If you make $500,000, the first $2,500 in donations won't be deductible at all. This mirrors the existing (but much higher) hurdles for medical expense deductions and could significantly reduce tax benefits for tech employees who regularly donate to causes they care about.
AMT Phaseout Reduction: ISO Exercises Just Got Costlier
The Alternative Minimum Tax (AMT) exemption phaseout threshold is being reduced, primarily impacting high-earners who exercise Incentive Stock Options (ISOs).
Who's affected: If you're planning a large ISO exercise, this change could materially increase your AMT liability. Though the AMT “Exemption amount” remains the same – this is the income excluded from the AMT calculation – this exemption starts to get phased out once AMT Income reaches higher levels.
The 2% Haircut on Itemized Deductions
Starting in 2026, if you're in the top 37% tax bracket, your itemized deductions will only provide a 35% benefit instead of 37%.
Example: A $1,000 deduction that previously saved you $370 in taxes will now save only $350. It's not huge individually, but it adds up across all your itemized deductions.
Clean Energy Credits Are Disappearing Fast
Electric Vehicle Credit: The $7,500 EV credit expires September 30, 2025 - your vehicle must be delivered by then
Residential Solar/Clean Energy Credit: The 30% credit for solar panels and other home energy improvements expires December 31, 2025
Practical Planning Steps
Before December 31, 2025:
Accelerate EV purchases if you're planning one (credit expires September 30, 2025)
Consider solar installations before the 30% credit expires
Review your charitable giving strategy given the upcoming 2026 changes
For 2025 Tax Planning:
Reassess itemizing vs. standard deduction with the new charitable deduction for non-itemizers.
Model the impact of SALT deduction changes on your specific situation.
Time ISO exercises carefully considering AMT changes.
Long-term Considerations:
QSBS planning if you're at a startup or considering joining one.
Charitable giving strategy needs updating for the 2026 hurdle.
The Bottom Line
The OBBBA's impact on tech employees is nuanced. While you won't benefit from the headline-grabbing provisions on tips and overtime, several changes will directly affect your tax situation - both positively and negatively.
The key is understanding these changes now so you can plan accordingly. The charitable deduction hurdle, AMT changes for ISO exercises, and expiring clean energy credits require immediate attention. Meanwhile, the enhanced QSBS benefits and charitable deductions for non-itemizers create new opportunities.
Don't let the complexity overwhelm you, but don't ignore these changes either. A little planning now can save (or cost) you thousands in taxes down the road.