Elon Musk will pay the biggest tax bill in U.S. history this upcoming tax season. This weekend, the Tesla CEO tweeted, unprompted, "For those wondering, I will pay over $11 billion in taxes this year."
Last month, Musk made made waves with a Twitter poll asking his 61 million followers whether he should sell a 10% chunk of his stake in Tesla. The results were strongly in favor of the sale, and over the ensuing weeks Musk sold $14 billion worth of shares in his company.
But there's another reason why Musk needed to start selling shares: stock options. The world's richest man — whose net worth currently stands at $243 billion, according to Bloomberg — needed to sell shares to pay off a major tax bill that he is incurring by exercising stock options.
In 2012, Musk was awarded Tesla stock options that allowed him to buy 22.8 million shares at $6.24 per share. Those options expire next year, giving Musk a limited window to take advantage. As of last week, Musk has exercised the right to buy millions of shares. Tesla is trading at $904 per share as of Monday morning.
Get New England news, weather forecasts and entertainment stories to your inbox. Sign up for NECN newsletters.
Now, Musk will need to pay taxes on the difference between the 2012 and 2021 stock prices at a rate of more than 50%. The tax bill "over $11 billion" is close to the $12 billion figure projected by CNBC's Robert Frank last week.
The SEC filings detailing a number of Musk's sales said that they were made "solely to satisfy [Musk's] tax withholding obligations related to the exercise of stock options."
Shares of Tesla were down 3% Monday morning, but the electric automaker is still having a strong year. The company is up roughly 25% year to date, and earlier this year became just the sixth company ever to reach a $1 trillion market cap. Tesla's market cap currently sits just over $900 billion.
Musk is still the world's richest person by a wide margin, and has seen his net worth grow by more than $87 billion in 2021. Earlier this year, his net worth was as high as $340 billion.
For comparison's sake, the world's second-wealthiest person, Jeff Bezos, is currently worth $195 billion. Bill Gates, the world's fourth-richest person, is worth $135 billion.
This story has been updated to include Musk's reported tax bill.
Sign up now: Get smarter about your money and career with our weekly newsletter