Trump-Era Tax Breaks: What’s Changing And What’s Not??

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If you’re a high-earning tech professional in California, especially in the Bay Area, you know taxes can take a big bite out of your paycheck. The Trump-era tax law, passed in 2017, gave many high earners some relief, but many of those breaks were set to expire by the end of 2025.

If you are a tech professional interested in learning how we can help you claim your financial independence by investing wisely, minimizing taxes, and maximizing your equity compensation, please book a no-obligation call here.

Congress recently took action to extend or modify many provisions, but some significant changes are forthcoming. Here’s what’s changing, what’s staying the same, and why it matters to you. Also, watch the video below to understand what happens when AMT is triggered.

Key Takeaways:

SALT deduction cap rises to $40,000 but phases out for incomes above $500,000
QSBS deduction cap rises and holding period shortens, great news for startup investors
The estate tax exemption is permanently $15 million per person
Mortgage interest and capital gains tax rates stay the same
New temporary deductions mainly help middle-income earners.

What’s Changing?

1. SALT Deduction Expansion

The state and local tax (SALT) deduction cap, which had been stuck at $10,000 since 2017, will expand to $40,000 for married couples filing jointly (and $20,000 for singles) for incomes up to $500,000. However, the deduction phases out between $500,000 and $600,000 of income, reverting to $10,000 above that amount.

Why it matters: High earners in California typically pay much more than $10,000 in state and local taxes, so that this expansion can ease your federal tax bill, if your income is under the phaseout range.

2. Qualified Small Business Stock (QSBS) Deduction Updates

One of the less talked-about but powerful changes is to the QSBS deduction under Section 1202. Previously, investors could exclude up to $10 million of gains or 10 times their original investment if they held qualified small business stock for at least five years.

What’s new?

The exclusion cap increases from $10 million to $15 million or 10 times the investment, whichever is greater. The holding period for a partial exclusion drops from 5 years to 3 years. Slightly larger businesses can now qualify.

Why it matters: This change encourages investment in startups, something many tech professionals in the Bay Area may be involved in, and offers huge tax savings on gains from those investments.

3. Estate Tax Exemption

Currently, individuals can pass about $13.6 million tax-free to heirs, or $27.2 million per couple. That’s thanks to a temporary increase under the 2017 tax law. The estate tax exemption remains permanently high at $15 million per individual (adjusted for inflation). This is a major win, preventing a large estate tax bite when passing wealth to heirs.

Why it matters: If you’ve built wealth through equity compensation or real estate, this gives more certainty for legacy and estate planning.

4. Charitable Donations (Starting 2026)

Non-itemizers can deduct $1,000 (single) or $2,000 (joint) for charitable gifts
Itemizers will lose a portion of their deduction equal to 0.5% of MAGI (e.g., $1,500 reduction for $300K MAGI).

💡Tip: Those who want to avoid it should consider accelerating donations into 2025.

5. Alternative Minimum Tax (AMT) May Return for More Households

Under the Trump tax cuts, fewer households had to worry about AMT. With those cuts set to expire in 2026, more upper-middle and high-income earners may again face AMT, especially if itemized deductions like SALT remain capped.

What does this mean for you?

If you’re already close to the AMT threshold, you may owe more taxes starting in 2026, unless further planning is not done.

6. New Targeted Deductions (2025–2028)

These mainly benefit middle-income earners but show lawmakers’ efforts to offer broad relief.

Social Security Deduction: $6,000 per person age 65+ for single filers earning up to $75,000 and joint filers up to $150,000
Tips Deduction: Up to $25,000 deduction for tipped workers earning up to $150,000 (single) or $300,000 (joint)
Overtime Deduction: Up to $12,500 (single) or $25,000 (joint) for qualified overtime income under the same income limits as above
Car Loan Interest Deduction: Deduct up to $10,000 in car loan interest.

What’s Staying The Same?

1. Mortgage Interest Deduction

You can still deduct interest on up to $750,000 of mortgage debt. This is important given the high home prices in California. Staying within the cap is still critical for keeping your interest deduction intact.

2. Capital Gains Tax Rates

Long-term capital gains tax rates remain unchanged at a top rate of 20%, plus the 3.8% net investment income tax. If you’re selling company stock or exercising stock options, these rates still apply. No new surtaxes or increases are proposed yet.

3. Retirement Contribution Rules

401(k), IRA, Roth IRA, and HSA contribution rules remain intact. It’s still a good time to max out contributions if you’re eligible.

Who Are The Winners And Losers?

Trump’s new tax plan focuses on maintaining broad tax relief while delivering targeted gains to business owners and high-net-worth households. Some working families, small business owners, and wealthy individuals with significant estates or investment income stand to benefit the most. But taxpayers who don’t qualify for these deductions or credits, such as those without dependents, not running a business, or not affected by the estate tax, may see fewer advantages.

What Should You Do?

Plan for SALT Phaseouts: If your income is above $500,000, consider strategies to reduce your modified adjusted gross income (MAGI) to maximize the SALT benefit.

Leverage QSBS Changes: If you invest in startups or early-stage companies, review how the new QSBS rules can help reduce capital gains taxes.

Review Estate Plans: With the permanent $15 million exemption, it’s a good time to revisit estate strategies, especially for those with significant equity holdings.

Stay Current on Charitable Strategies: Accelerate or time donations for maximum tax efficiency under the new phaseouts.

Final Thoughts

The recent changes provide more certainty in tax planning but also require attention to details, especially for high-income tech professionals in California facing unique tax pressures. While some Trump-era benefits remain, others are changing in ways that could impact your tax bill and investment choices.

Next Steps For You:

If you want to understand how these changes affect your personal financial picture or build a strategy to keep more of what you earn, reach out. At True Root Financial, we specialize in helping Bay Area tech professionals navigate these complexities and optimize their tax and investment plans. Let’s talk strategy before these tax changes take full effect. Contact us today!

Trump-Era Tax Breaks: What’s Changing And What’s Not??

Key Takeaways: