This week has been all about tax reform and provisions that impact the startup community's stock options structure.
Yesterday, the House passed its tax overhaul bill (HR 1). House Majority Leader Kevin McCarthy (R-CA 23) has praised a provision that would allow employees of not (yet) public companies who exercise stock options to defer paying the taxes they owe for up to five full years. The goal here is to allow startup employees to build liquidity over the five years in order to pay the taxes without putting extra strain on their wallets.
"The people who have no wealth but are working hard have to turn down stock options because they can't pay the tax on it. That's what's happening. But now they have a hope," said Majority Leader McCarthy.
The Senate, led by Senator Dean Heller (R-NV), has added an amendment to the Senate tax reform bill that matches the language passed in the House. The Senate Finance Committee passed the legislation late Thursday and now it goes to the Senate floor for debate, likely after Thanksgiving.