In November, Jeff Bezos announced that after just under 30 years, he had moved his official permanent residence from Seattle to Florida. And now we know why. In the last NINE trading days, including Wednesday, February 21, Jeff has sold $8.5 billion worth of Amazon shares. And since he is now a Florida resident, those share sales will not be subject to any state income tax. But wait, Washington is a zero-income tax state, isn’t it? That’s what makes the timing of his move and sales especially interesting…
Jeff and his former wife MacKenzie moved from New York to Seattle in 1994 to launch what became Amazon.com. According to legend, Jeff wrote the business plan on his laptop while MacKenzie drove their Volvo cross-country.
Amazon went public in May 1997. Jeff began selling shares the very next year. Nothing abnormal about that. People need some money to pay for things like cars, houses, and school tuition. According to regulatory filings, between 2002 and 2022, Jeff sold $38.5 billion worth of shares. He used those billions to purchase hundreds of millions of dollars worth of personal real estate, private jets, a $500 million yacht, the Washington Post, and much more. Between 2017 and 2022, he sold $1 billion per year just to fund his Blue Origin space exploration company.
And by the way, none of these share sales were related to his 2019 divorce from MacKenzie. When they finalized their divorce settlement, Jeff transferred 4% of Amazon to MacKenzie in the form of shares, not cash. At the time of transfer, those shares were worth $35.6 billion. She has since donated around $14 billion to various charities. Her remaining shares still give her a net worth of $36 billion, which makes her one of the fifth richest woman in the world. Jeff is now dating former TV host Lauren Sánchez. They appear to be having a lot of fun together, partying on yachts, attending the Oscars, and generally gallivanting to events like Miami’s Formula 1 race last May, where the following picture was snapped:
(Photo by Clive Mason – Formula 1/Formula 1 via Getty Images)
Why did Jeff stop selling his shares in 2022?
Eight American states do not charge their residents a state income tax. Those seven states are:
- Alaska
- Florida
- Nevada
- South Dakota
- Texas
- Washington
- Wyoming
- Tennessee
A ninth state, New Hampshire, does not tax earned income but does tax interest and dividend income. From some quick research, I THINK New Hampshire is phasing out those taxes this year to become the ninth state with zero income tax.
Seattle, as you may know, is located in the state of Washington. So from 1998 to 2022, when Jeff sold at least $40 billion worth of shares, he paid ZERO DOLLARS in state income taxes. Had he lived in California during those years, he would have paid $5.2 billion thanks to its 13% maximum capital gains tax rate.
So what changed in 2022?
In 2022, Washington imposed a 7% capital gains tax on sales of stocks or bonds of more than $250,000.
The moment the new tax went into effect, Jeff stopped selling. He sold no shares in 2022 and no shares in 2023. In November of 2023, Jeff took his talents to Miami. As you may know, Miami is located in the state of Florida.
As we stated at the beginning of this article, in the last NINE trading days alone, Jeff Bezos has sold roughly 50 million shares of Amazon for pre-tax proceeds of $8.5 billion. By conducting these sales in 2024 as a newly established Florida resident, Jeff has successfully side-stepped Washington’s 7% income tax. That means he just saved himself…
$600 million
AKA, enough to fully cover the purchase price of his $500 million yacht with plenty left over to keep it sailing for decades to come.
Jeff Bezos is not the first billionaire to move to Florida to avoid taxes on share sales and dividends. Another famous example is Oracle founder Larry Ellison. After more than 40 years of being a California resident, in April 2021 Larry paid $80 million for a Florida mansion. Larry owns 42% of Oracle, roughly 1.1 billion shares. Larry doesn’t sell his shares frequently. Instead, he funds his lifestyle, which includes yacht teams, a literal fleet of planes, a world-famous tennis tournament, and the entire Hawaiian island of Lanai, through income earned via Oracle dividends.
Between 2003 and his 2021 Florida move, Larry earned $12 billion in dividends. Along the way, he paid the state of California $1.6 billion in taxes.
Perhaps not surprisingly, Oracle’s dividend has nearly doubled since he moved to Florida in 2021, from $0.24 per share per quarter to $0.40 per share per quarter today. As the owner of 1.1 billion shares, that jump has increased Larry’s annual dividend income from $1 billion to $1.8 billion. And on those $1.8 billion dividend payments, he’ll save $230 million on taxes every year.
Larry seems to be very much enjoying Florida life and the extra income it has put in his pockets. In June of 2022 he paid $175 million for an absolutely insane waterfront property not far from Palm Beach. Larry bought the home from internet entrepreneur Jim Clark, who bought it himself just 15 months earlier for $95 million. We call it the greatest home flip of all time. In August of 2022, Larry listed his original $80 million mansion for $145 million. He ultimately pulled the listing and still owns this house today.