Jensen Huang has also leveraged his charitable organization, the Jen Hsun & Lori Huang Foundation, by making significant donations of Nvidia shares.
Jensen Huang, the 61-year-old co-founder and CEO of Nvidia, is the 10th richest individual in the US, with a net worth of $127 billion. With such an extraordinary fortune, federal estate taxes could claim 40% of the total—potentially exceeding $50 billion. However, Huang’s financial strategies suggest he is poised to pass on much of his wealth with minimal tax liability, effectively avoiding an estimated $8 billion in taxes, according to securities and tax filings reviewed by The New York Times (NYT).
While Huang’s approach is not unique, it highlights how the ultra-wealthy often find ways to sidestep estate taxes. Originally introduced in 1916 to limit inherited wealth, the estate tax has become less effective due to legal changes and clever loopholes exploited by the rich. As a result, it has contributed little to federal tax revenue since the early 2000s. Had the tax kept pace with the growing wealth of the ultra-rich, it could have generated around $120 billion last year, but instead, it brought in only a small fraction of that amount.
Daniel Hemel, a tax law professor at NYU, explains that about $200 billion is passed on each year without paying estate taxes, thanks to trusts and strategic financial planning. These strategies are not just loopholes but are often recommended by expensive legal and financial experts who utilize complex tax rules, court rulings, and IRS guidelines.
As Jack Bogdanski, a professor at Lewis & Clark Law School, puts it, “You have an army of well-trained, brilliant people who sit there all day long, charging $1,000 an hour, thinking up ways to beat this tax,” as quoted by the NYT.
Huang’s tax strategy has garnered attention for its complexity. In 2012, he established an irrevocable trust with 584,000 shares of Nvidia, valued at $7 million at the time. This was part of a broader plan known in financial circles as “I Dig It,” which the IRS first validated in 1995. This type of trust shields assets from both estate and gift taxes, protecting them from tax liability as they appreciate after being transferred.
“From an estate-tax-planning standpoint, it’s a home run. He’s done an outstanding job,” said Jonathan Blattmachr, a trusts and estates lawyer.
By 2023, the value of Huang’s trust holdings had grown to over $3 billion. Without this strategy, his heirs would face a tax bill of more than $1 billion.
In 2016, Huang and his wife, Lori, further minimized their tax liabilities by establishing grantor-retained annuity trusts (GRATs). This method allows assets to be transferred to beneficiaries without incurring estate tax, provided their value appreciates beyond the amount paid back to the grantor. The shares in these trusts have since soared, now valued at over $15 billion. Additionally, Huang has leveraged his charitable foundation, the Jen Hsun & Lori Huang Foundation, by making significant donations of Nvidia shares. These contributions offer immediate tax deductions, helping to reduce both income and estate taxes.
