Where Linear sits today
Linear is a late-stage Dev tools company headquartered in CA. An active secondary market gives employees a path to partial liquidity before IPO through platforms like Forge, Hiive, EquityZen, or company-run tender offers.
What California residency changes
California taxes RSU ordinary income, NSO exercise spread, and ESPP discount income at up to 13.3%. For a Linear employee sitting on a large vested-but-not-settled equity position, the liquidity-event year stacks state tax on top of the federal 37% bracket, producing a combined marginal of approximately 50.3%.
State AMT on any ISO exercise
California runs its own state AMT on top of federal. If Linear grants ISOs and you plan to exercise before the liquidity event, you'll face both federal and state AMT. A $1M bargain element in California generates federal AMT plus approximately 6-7% additional at the state level, which adds meaningfully to the exercise cash requirement.
QSBS and California
California does NOT conform to federal QSBS. Even if your Linear stock qualifies for the Section 1202 exclusion federally, California taxes the full gain at up to 13.3%. That's the single largest planning gotcha for Bay Area founders and early employees on exit.
Moves to make before the liquidity event
Adopt a 10b5-1 plan during the last open window before Linear's S-1 (90-day cooling-off for non-officers, 120 days for officers/directors). Model federal and state AMT before any ISO exercise. Maximize after-tax 401(k) contributions in the months before IPO, while your ordinary income is still at the pre-IPO baseline. If you're considering a move out of California, time it well before vesting events to minimize trailing-nexus exposure.