Sources say that Musk have told them he’s planning to move to Texas. The people with knowledge of his plans asked not to be named because their conversations were private.
Musk, the world’s second-wealthiest person behind Amazon’s Jeff Bezos, is in Texas frequently already. He spends most of his time between Austin, where Tesla and his tunnel start-up Boring Company have operations, and a coastal village called Boca Chica, home to a SpaceX facility. SpaceX started operating in Texas in 2003.
California has seen an exodus of notable tech names during the pandemic as companies look to cut costs and prepare for a future of distributed work. Musk has been among the loudest critics this year, comparing the state to a championship sports team that’s become complacent.
In May, as businesses across California were forced to remain closed because of the pandemic, Musk tweeted that he was moving Tesla’s headquarters and future development from California to Texas and Nevada.
Getting out of California, with the highest income tax in the country, and into Texas, which has no state income tax, could save Musk billions of dollars based on his compensation package awarded in 2018. Musk was granted 101.3 million options (adjusted after a 5-for-1 stock split this year) that vest over time as the company hits certain milestones, including market cap numbers.
Tesla’s stock has surged 782% in the past year. As of October, Musk had earned awards currently worth about $20 billion before taxes, based on Thursday’s close.
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.
To help lure Tesla’s new factory, local officials granted the company tens of millions of dollars in property tax breaks. Musk confirmed on the company’s second-quarter earnings call in July that the plant would occupy about 2,000 acres 15 minutes from downtown, and would be used to build the Cybertruck, its Semi, Model 3 and Model Y. Musk said the factory will start delivering cars next year.
For now, Tesla’s headquarters is still in Palo Alto, California, and the company continues to build cars in nearby Fremont. SpaceX’s main address is in Los Angeles County at 1 Rocket Road in Hawthorne.
But Musk’s personal financial reasons for leaving California are significant. Under his 10-year compensation package approved in 2018, Musk could earn well over $50 billion in stock and awards. He would have to pay income taxes on the profits when he exercises the options. The top state income tax rate in California is 13.3%. In Texas, it’s zero.