How Nvidia’s Jensen Huang saves billions by avoiding estate taxes

The co-founder and CEO of Nvidia, Jensen Huang ranks as the 10th wealthiest individual in the United States, with a staggering net worth of $127 billion. While estates of this magnitude are typically subject to a 40% federal estate tax—potentially surpassing $50 billion—Huang’s carefully designed financial strategies are expected to minimize his tax liability significantly. This reportedly saves him around $8 billion. This goes on to say how ultra-wealthy individuals employ sophisticated tactics to preserve their wealth.

Huang’s approach is part of a broader pattern among billionaires who utilize legal tools to avoid estate taxes. Originally introduced in 1916 to curb inherited wealth, the estate tax has lost much of its effectiveness due to legislative changes and the creative use of tax loopholes.

By 2022, it contributed minimally to federal tax revenue. Analysts have speculated that if the tax had kept pace with the growth in wealth among the richest Americans, it could have generated $120 billion in revenue last year. Unfortunately, it brought in only a fraction of that amount.

Huang’s tax planning has drawn significant attention due to its effectiveness. In 2012, he established an irrevocable trust containing 584,000 Nvidia shares, valued at $7 million at the time. This was part of a tax planning strategy known as “I Dig It,” a method first validated by the IRS in 1995.

Such trusts enable assets to appreciate after their transfer without being subjected to estate or gift taxes.

Experts have praised Huang’s foresight. Jonathan Blattmachr, a lawyer specializing in trusts and estates, described his approach as a “grand slam” in estate-tax planning, commending its remarkable efficiency. By 2023, the holdings in Huang’s trust had skyrocketed to over $3 billion in value. Without this strategy, his heirs would have faced a tax bill exceeding $1 billion.