This is in contrast to current law, which requires only 90 days of grace period.

This effectively legislates what AirBnB, Pinterest and others have been doing due to free market pressure [0].

This is good for employees, since you might not have enough money to pay for the taxes on the stock that you vested and exercised (due when you exercise under current and proposed law). But arguably, it’s not really important for the government to mandate this; it’s sufficient for the government to allow deferred option exercise dates (which is the case in current law).

As tptacek wrote, this has a stench of pandering to it; the new tax law is IMO largely bad (and I say this as someone who probably stands to benefit from it). But this wrinkle is most certainly better than the proposal from yesterday, which I believe would have been stifling to startups and would have pushed most startups to either defer any fund-raising to keep valuation low and thus options affordable to new hires (bad for startups and VCs; good for incumbent companies due to reduced competition), or to do huge raises to compete on salary alone (bad for startup founders and employees due to presumed higher percentagowned by VCs; perhaps good for VCs if it didn’t damage startups too much; good for incumbents since it again makes startups higher-friction).

[0] https://github.com/holman/extended-exercise-windows

The amendment provides that certain employees who receive stock options or restricted stock units as compensation for the performance of services and later exercise such options or units may elect to defer recognition of income for up to 5 years, if the corporation’s stock is not publicly traded.

Perhaps the amendment itself makes this clear, but it sounds like this does not in any way affect option exercise timelines. It sounds like this just lets you defer recognition of the income resulting from an exercise.