Jensen Huang is saving billions in taxes: A look inside Nvidia CEO’s strategy

Jensen Huang, the 61-year-old co-founder and CEO of Nvidia, is among the wealthiest individuals in the United States, boasting a net worth of $127 billion. With federal estate taxes claiming up to 40% of such extraordinary valuations, Huang could face a tax bill exceeding $50 billion. Yet, his financial planning is poised to minimise this liability, potentially saving over $8 billion in taxes, according to an analysis by The New York Times.

Huang’s financial manoeuvres exemplify the strategies employed by the ultra-wealthy to bypass estate taxes, which were originally designed to curb the accumulation of inherited wealth. Over time, legal loopholes and evolving tax laws have eroded the tax’s effectiveness, reducing its contribution to federal revenue.

“If the estate tax had kept pace with the growth of wealth among the ultra-rich, it could have generated $120 billion last year,” noted the report. Instead, the actual revenue was a fraction of that amount.

Huang’s approach to estate planning demonstrates a masterclass in legal tax avoidance. In 2012, he established an irrevocable trust with 584,000 Nvidia shares worth $7 million at the time. This structure, part of a method known as “I Dig It,” shields assets from estate and gift taxes, allowing their appreciation to escape taxation. By 2023, the value of these shares had skyrocketed to over $3 billion, sidestepping a potential $1 billion tax bill for his heirs.

Huang and his wife, Lori, further diversified their tax strategy in 2016 by setting up grantor-retained annuity trusts (GRATs). This approach ensures that any asset appreciation exceeding the repayment to the grantor is transferred to beneficiaries free of estate taxes. The shares in these GRATs, initially modest, are now valued at over $15 billion.

Huang has also leveraged philanthropy to reduce his tax burden. Through their Jen Hsun & Lori Huang Foundation, the couple has donated significant quantities of Nvidia stock. These contributions yield immediate tax deductions and further reduce income and estate taxes, aligning charitable giving with financial planning.