Tesla’s Elon Musk Could Save Billions in Move to Texas

Elon Musk said he moved to Texas because he was fed up with California’s COVID-19 response and to be closer to his Tesla and SpaceX facilities in the Lone Star State. But there could be another reason for Musk’s big move: avoiding California’s capital gains taxes. Musk — the CEO of California-based Tesla and SpaceX — this year became the world’s second-richest man with a net worth of $157 billion, mostly from his roughly 20 percent stake in Tesla. The electric automaker’s stock has skyrocketed 700 percent over the past year to $608 a share, up from $67 a share a year ago. Tesla’s market value on Wednesday morning hit a record $653 billion, earning Musk stock options from his 2018 compensation package that are now worth nearly $18 billion. If Musk sold his Tesla shares as a California resident, he would be subject to the Golden State’s capital gains tax of 13.3 percent on top of the federal capital gains tax of 20 percent. The California capital gains tax on his $18 billion of stock options in Tesla would amount to a charge of nearly $2.4 billion. However, as a newly-minted Texan, Musk can save billions of dollars in capital gains taxes if he decides to sell some of his Tesla stock. Texas is one of nine states that doesn’t have a capital gains tax. Musk has not taken a salary from Tesla, so he was not responsible for paying any California state income taxes, which can be as high as 10 percent. Tesla did not immediately respond to a request for comment. Click to read more at www.chron.com.