How Much Does Elon Musk Pay in Taxes? $11B vs Tesla’s $0
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Roshan Amiri
- . July 4, 2025
- . Update: July 4, 2025 10:32 pm
The futile comparison of the difference between the personal and corporate tax liabilities has never been more evident than through the prism of how much does Elon Musk pay in taxes compared to the amount paid by his company. As the richest entrepreneur in the world paid a record amount of federal taxes in 2021, his company Tesla did not pay anything to the federal government even though in 2021 the company reported its most profitable year ever.
How Much Does Elon Musk Pay in Taxes From Stock Options?
The amount that Elon Musk pays in taxes would be more evident when one looks at his huge tax bill due to strategic use of stock options exercises, which incurred huge taxable income. The Tesla CEO used options, with a value that was about 23.6 billion dollars that gave him a taxable income of 23.5 billion dollars. Together with other stock sales amounting to 5.8 billion, Musk was subjected to an estimated federal tax rate of 41 percent on his gains.
This huge amount of taxes paid reflects how much does Elon Musk pay in taxes when he has to gain some benefits in the equity shares. Unlike the conventional executives who are paid salary or wages, the compensation of Musk is mainly in the form of stock option which is not taxed until it is exercised.
Even though Tesla earned a net income of 5.5 billion dollars and adjusted income of 7.6 billion dollars in 2021, the company paid no federal tax. According to the financial filings, the company lost 130 million dollars on a pre-tax basis in the USA and reported more than 6 billion dollars in pre-tax profits of foreign operations.
According to tax professionals, such a structure is within the usual practice by multinational corporations. It is common practice by companies to regulate their activities to ensure that most of the revenue appears in foreign sub-entities whereas the US entities have intra-group costs and licensing fees on intellectual property, resulting in little taxable incomes.
The geographic profit distribution of Tesla is also not credible since 45% of the revenues were earned solely in the US. The company forked out 839 million in foreign taxes and at the same level only 9 million in state taxes, and paid nothing to the federal coffers.
Chief economist at Tax Analysts Martin Sullivan observes that such a practice does not contradict the US tax code even though it does not make common sense. Data obtained by the Treasury Department reveals that 61 percent of the profits earned by US multinationals are reported in seven tax haven jurisdictions- Bermuda, Ireland and Luxembourg amongst others.
