Zuckerberg Tax: Facebook CEO to Pay $1.1 Billion, Report Says

March 28, 2013 Updated: July 18, 2015

Zuckerberg tax: It was reported that Mark Zuckerberg will have to pay the tax man $1.1 billion.


Facebook CEO Mark Zuckerberg will likely have to pay more than $1 billion in taxes, according to a report from CNN on Thursday.

CNN Money reported that Zuckerberg, who is worth around $13 billion, will have to pay $1.1 billion for his 2012 taxes likely because he increased his stake in the social media company he helped found. In May 2012, he exercised a stock option that bought 60 million shares of Facebook at 6 cents each, or a “strike price.”  

The IRS treats those shares as ordinary income when the options are exercised, CNN said. Zuckerberg will have to report $2.3 billion from his own stock options.

For this, he will have to pay a 35 percent federal tax rate and a 13.3 percent California tax rate, meaning he’ll have to pay around $1.1 billion. California’s tax rate is the highest in the country.

“With numbers that large, it’s usually capital gains, not ordinary income,” Toby Johnston, with Moss Adams LLP in Silicon Valley, told the network

Zuckerberg apparently sold 30.2 million shares of Facebook stock during the company’s IPO, which made him $1.135 billion. In a regulatory filing, Facebook said Zuckerberg would use a “substantial majority” of the cash to pay for his taxes.

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Earlier this week, Zuckerberg entered politics for the first time by taking a leading role in the Silicon Valley SuperPAC that will focus on liberalizing the U.S. immigration and visa system, reported the Daily Telegraph.

Zuckerberg will use around $20 million of his own cash to help fund the organization, which will be lead by his former roommate, Joe Green.

Several weeks ago, Zuckerberg and 99 other heads of technology firms wrote to President Obama and Congressional leaders to free up some of the restrictions on the U.S.’s strict immigration controls.

“Many high-skilled immigrants who want to stay in America are forced to leave because they are unable to obtain permanent visas,” the letter reads. “Some do not bother to come in the first place.”

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