Elon Musk has decided to move from California to Texas. This decision comes because Texas has no state income tax. According to experts, this move could end up saving him billions of dollars. Several of Musk’s close friends and associates say that he has informed them of this move.
Elon Musk Set To Move From California To Texas To Save State Income Tax
According to a report in CNBC, “Even the people who know him well and are aware of his general plans to move to Texas say they don’t know where exactly he stays when he’s there and that he tries to keep those details private.” In May this year, Musk said that he has listed his California properties, and is planning on selling all his houses.
The Reason For The Shift
Musk was granted 101.3 million options this year, adjusted after a 5-for-1 stock split. With Tesla’s stock soaring this year, Musk became the second richest person in the world last month. Bloomberg Billionaires Index said that Elon Musk sits at $127.9 billion, as compared to Bill Gates’ $127.7 billion.
The 49-year-old entrepreneur has increased his net worth by more than $100 billion since January. In the process, he became one of the fastest-growing among world’s 500 richest people. Because of this, the move to Texas makes sense. Musk had also mentioned that he might also consider moving the Tesla headquarters to Texas as well.
As of right now, Musk stands at second place behind Jeff Bezos, with a net worth of $134.7 billion. Having increased his net worth multi-fold over the past 15 months, he also earned the title of Fortune’s Businessperson Of The Year. Out of this $134 billion, Musk has to pay top capital gains tax rate of 13.3% in addition to federal capital gains rate of 20% as a resident of California.
For the sake of calculations, if he sold all ensuing shares at the current trading price of $599.04, he could owe California as much as $18 billion. If he moves to Texas, he can dodge that entire bill. That is $18 billion of taxes saved. For perspective, the entire market cap of Domino’s Pizza is $15 billion.
It is quite interesting that Musk is moving to Texas. What will be even more interesting is if he does, in fact, move the Tesla headquarters to Texas as well. California is currently the heart of electric vehicles in the US. But with plans for another Gigafactory to be built in Austin, Texas, you never know.
The Texas tax savings could also entice Musk to sell some of his Tesla shares to pay down his debt. Over half of his equity stake in Tesla is collateral to his personal debt, according to Tesla’s most recent SEC filing. So this move could help him from various different angles.