Trump’s Tax Blunder is Making Tech Employees Rich
Trump’s latest tax laws are creating massive opportunities for tech employees to save thousands in taxes. But hidden inside the law is a costly blunder that can push your tax rate as high as 48% (or even 61% if you’re in California).
As an advisor to 8-figure tech executives, I’ve researched the details and here’s what you need to know:
The tax blunder that quietly drains away the $40,000 SALT deduction.
How to avoid the phaseout zone that can double-tax your income.
A bonus tax shelter expanded by the new law that can save you an additional $6,000 each year.
The $40,000 SALT Deduction—and the Hidden Tax Trap
The new tax law increased the state and local tax (SALT) deduction from $10,000 to as much as $40,000. For high-income tech employees in states like California and Texas, that’s a huge win.
But there’s a catch: the deduction phases out as your income rises.
If you earn above the income threshold, your $40,000 benefit shrinks—sometimes all the way back to $10,000.
Worse, every extra dollar you earn in this range doesn’t just get taxed—it also reduces your deduction by 30 cents. That means you’re effectively taxed on $1.30 for every $1 you earn.
👉 If you’re in the 37% federal bracket, this creates a 48% tax hit before state taxes. Add California’s top rate, and your marginal rate can spike above 61%.
How to Avoid the SALT Deduction Phaseout
To keep your full $40,000 benefit, you need to carefully manage your income relative to the phaseout zone.
Strategies include:
Delaying exercises of stock options or sales of vested shares until the following year.
Pushing more income into tax-advantaged accounts like 401(k)s or deferred compensation.
Strategically timing Roth conversions or equity sales to avoid crossing into the danger zone.
Because the expanded SALT deduction is temporary, you’ll want to maximize it now—before it expires in a few years. Working with a tax planner is essential to model scenarios and pull the right levers.
The Overlooked $6,000 Bonus: Health Savings Accounts (HSA)
Another big win in the new tax law is the expansion of Health Savings Accounts (HSAs).
Many tech employees are just learning that HSAs can be even more powerful than Roth IRAs. Here’s why:
Employer contributions avoid payroll tax.
Your own contributions are deductible, lowering taxable income.
Investments grow tax-free.
Withdrawals are tax-free for medical expenses—and in retirement, they function like a traditional IRA.
For a family in the top bracket, maxing out an HSA can save over $3,000 in income tax annually—and with growth plus withdrawals, the long-term tax savings can exceed $6,000 per year.
This is especially valuable for tech employees at startups, where leaner Bronze or Catastrophic health plans may now unlock access to HSAs.
The Bottom Line
Trump’s tax law offers real opportunities for tech employees to shield income and build wealth:
Up to $40,000 from the expanded SALT deduction (if you avoid the phaseout blunder).
Up to $6,000 annually from HSAs thanks to expanded access.
⚠️ But don’t fall into the trap of letting taxes dictate every decision. Optimizing only for taxes often backfires. The smarter play is to align your tax strategy with your goals, risk tolerance, and financial plan.
