How to Pay NO Tax on the SpaceX Tender (And Prep for a $1.5 Trillion 2026 IPO)
If you work at SpaceX, congratulations — you officially live in one of the strangest financial realities on Earth.
On one hand, your day job is sending multi-ton rockets into orbit with reusable boosters that casually land themselves like it’s a video game. On the other hand, your personal balance sheet has very likely creeped into “this will change my entire life” territory.
And right now — there are two major developments that offer a lot of opportunity — and also create a lot of potential for missteps and unnecessarily large tax bills:
A January 2026 tender at ~$400 each, and
Rumored 2026 IPO that could jump the price to as high as ~$800 a share!
If the rumors are even partially accurate, we’re looking at a tender offer near an $800B valuation and an IPO horizon somewhere around 2026 with talk of a $1.5T+ public valuation. Even by Silicon Valley standards, that’s very large. This article is your non-fluffy, insider-level guide to:
What actually matters in the upcoming SpaceX tender
Which shares you should (and should not) sell
How RSUs, ISOs, ESPP, capital gains, and AMT really work
How people accidentally light millions of dollars on fire with taxes…AND…how you can legally not pay (most) of those taxes (or at a minimum defer/manage your tax bill so it doesn’t knock you out)
And how to think about concentration risk when 70–90% of your net worth is in one company that literally builds rockets
Part 1 — Why SpaceX Employees Are in a Completely Different Financial Complexity Category
Most tech employees experience one liquidity event in their career — maybe two if they’re lucky. As a SpaceX employee you get (and have to navigate and strategize for):
Massive stock price increases over the last 8 years ($13.50 in 2017 to a rumored ~$800 at IPO)
Tender offers ~2x a year
Ongoing equity comp refreshes across all types (RSUs, ISOs, NSOs)
An ESPP you can participate in (with lookback and discount provisions)
A rumored massive 2026 IPO
That means your wealth doesn’t arrive in one clean lump (i.e. public company with RSUs). It comes in waves — and every wave has different tax rules attached to it.
Add in a few complicating factors:
Odd ISO rules (a partial disqualifying disposition invalidates the entire grant)
A huge stock increase creates a lot of ISO/AMT (and future AMT recoup) planning
State tax differences that swing millions of dollars (e.g. California AMT, Washington long-term-capital-gain tax)
8 or 9 figure net worth, typically 90%-plus in SpaceX stock (high concentration risk)
The complexity is high enough, and unique enough, that SpaceX employees can’t follow the standard playbook, and need a SpaceX-specific plan.
Part 2 — The Equity Types That Actually Matter (And How They’re Taxed)
Before we dive into the HOW/WHAT to do, let’s make sure we are fully aligned on the vectors of what equity you have, and how it works.
RSUs (or Restricted Stock Awards)
Pro = very simple. Con = brutally expensive from a tax standpoint. The moment they vest:
The full fair market value becomes ordinary income
It shows up on your W-2
You owe income tax whether you sell or not (SpaceX gives you the choice to pay in cash or garnish a portion of the vested shares to cover the withholding tax)
If you sell immediately at the same price as vesting → no capital gain.
If you hold and sell later → any increase becomes capital gain (or decrease becomes a loss, though SpaceX hasn’t had any decreases…at least not yet).
Translation: RSUs = guaranteed income tax. Planning is mostly about when and how you sell afterward (excepting a few interesting tools that can reduce your w-2 wages).
ISOs (Incentive Stock Options)
ISOs are where the most complexity lies.
No ordinary income at exercise
But the bargain element (FMV – strike price) can trigger AMT (pretty much always does for SpaceX folks given the large stock price increase)
If you pay AMT, it's recoupable in future years, but not always super easy to do (takes a lot of planning to get right)
For ISOs to get favorable long-term capital gains you need to: Hold 1 year after exercise AND 2 years after grant
Miss either of those → disqualifying disposition → ordinary income.
And now the SpaceX twist…The SpaceX ISO “Tainting” Rule
At nearly all companies, an exercise of a portion of an ISO is treated as independent (i.e. if you exercise 10 shares of a 500 share option and disqualify/sell those 10 prior to the required holding period, the other 490 retain their ISO status). BUT…..at SpaceX, there’s a painful gotcha you need to avoid:
If any portion of an ISO exercise becomes a disqualifying disposition, the entire grant loses favorable ISO treatment.
I’ve personally seen an individual who (prior to working together) wanted to see how a tender offer worked, and submitted a small $20k sale from an ISO. That turned the rest of the $3 million grant into an NSO. Brutal tax disadvantage!
NSOs (Non-Qualified Stock Options)
These are simpler, but not as tax-efficient as ISOs:
The bargain element (FMV – strike price) is treated as ordinary income
Capital gain after that when you sell
If you’re selling something in the tender, there are pros/cons for using NSOs vs. ISOs — each has its place.
ESPP (Employee Stock Purchase Plan), If Applicable
Tax outcome depends on:
Holding period
Offering period
Qualified vs disqualified sale
ESPP can be very tax-efficient and a great way to grow SpaceX wealth (given the lookback and discount provisions they offer).
Part 3 — The Tender Offer: SHOULD You Sell? And if So, WHICH Shares/Grants Should You Sell From?
Regarding what to sell — there is no one size fits all approach. With my SpaceX clients, I’ve literally advised different clients sell all of the following: (i) ISO-acquired stock, (ii) NSOs, (iii) ESPPs, and (iv) vested RSUs. Which of these equity types is optimal to sell depends on what you are optimizing for.
But to give some direction, we typically optimize for:
If selling ISO-acquired stock, always make sure it’s a qualifying disposition
Amongst stock choices (exercised ISO/NSO options or RSUs), typically only sell those in long-term-capital-gain territory. And amongst those, aim for the one with the highest tax basis (lowest capital gains amount, and thus tax bill from selling)
Bias for stock sales to be ISOs in qualifying dispositions (helps recoup AMT)
Occasionally tender unexercised NSOs—which can help decrease our AMT bill on ISO exercises done in the year
ESPP stock— I’ve never advised doing this for SpaceX thus far. First, we only consider ESPP shares in qualifying status. But SpaceX has only risen in value over the years. Due to (i) the time it took for ESPP shares to get to qualifying status, (ii) the lookback provision, and (iii) the discount provision — ESPP shares tend to have really low purchase prices. And because of that, selling stock acquired via RSUs vesting or exercised options become a more tax-optimal choice.
Regarding whether you should sell—this is even harder to generalize. It honestly depends on your financial situation, need for cash moving forward, risk tolerance, future living plans, and ISO/NSO exercise and tax plan. I have some clients selling a good deal in most tenders, and others who have skipped a few. But generally speaking:
If you have a need or want for cash (e.g. buy a home, start a business, start a family), OR if your risk tolerance isn’t high —> selling likely makes sense
If neither of those are true —> selling in the tender may make sense (depends on your ISO/NSO exercise plan and AMT pay/recoup tax strategy); otherwise likely doesn’t
Part 4 — Alternative Minimum Tax (AMT): The Tax Few Can Explain Well, and One of the Rare Taxes You Can Recover
Trying to avoid all the nuance, you typically end up owing AMT when you exercise ISOs. The bargain element (FMV – strike price) is considered income for AMT. In current tax dynamics, you can incur a little AMT-income without triggering an AMT tax bill. But above that minimal amount, you’re gonna owe AMT.
With the amount of price increases SpaceX has historically had, and more so with the large tender offer price jump and IPO rumors….you’re gonna have AMT when you exercise ISOs (likely a lot).
Some good news —> if you pay AMT in a given year, you’re able to recoup it in future years
More good news —> you can accelerate AMT recoup when you sell ISOs in a qualifying disposition
Some mixed news —> if you have a lot of unexercised ISOs, it’s likely a multi-year ISO/AMT juggle to figure out the optimal approach
Some bad news —> in addition to federal, some states also have an AMT/minimum tax to consider (most notably California)
At SpaceX current rumored valuations, a lot of folks could owe $1M+ of AMT if they exercised all their ISOs in the same year. And given rumored IPO prices, that bill could potentially double if you wait to exercise. But that also means you need the cash on hand to be able to fund it. Which typically means selling some SpaceX shares in the tender (I think you’re starting to see the fun planning complexities here….).
Part 5 — Capital Gains: How “Paying No Tax” (Or Less Tax) Is Actually Possible
When it comes to tax strategies — you have the most choices to reduce, defer, or even eliminate capital gains tax. But it’s not easy, typically requiring advance planning over multiple years.
The two biggest tools available now while SpaceX is still private are:
1) Tax-Loss Harvesting
Tax laws allow you to offset capital gains with capital losses; dollar-for-dollar. If you have existing investments at a loss you can sell, this can be a big strategic asset. Or, if you did so in the past and have been “carrying forward” on your tax returns.
It’s powerful, but traditionally also limited. Markets/investments tend to go up on average. Especially diversified ETFs (e.g. SP500). So there may be limited levers to pull here.
2) Long/Short Tax-Loss Harvesting (130/30…or even 200/100)
This is where things can get powerful. Details in the link here, but high level this is how it works. A long short portfolio maintains the same overall market exposure (e.g. 100%), but adds in a bit of borrowed stock and short sold stock. For example, a 130/30 portfolio looks like this:
You have $1m of cash to invest
You go 130% long ($1.3m long)
You also go 30% short (-$0.3m short)
Net exposure = 100% ($1.0m) — same as if you invested all of the cash
But when you build the portfolio this way (130/30, or a 200/100), and with a lot of individual stock positions, you intentionally create:
A portfolio with highly similar risk/reward to a 100% stock market investment
But with more positions (more opportunities for a single stock to lose)
And with some positions long and others short — a dynamic that creates much higher paper/realized losses in all markets (up, down, or sideways)
The realized losses from this become a big tax asset. Let’s play it out:
Simplified 2026 example
You realize a $1m long term capital gain $1,000,000 capital gain from the tender in January
You have an existing $2m investment portfolio and add the $1m, so $3m now available
You invest that $3m in a long/short allocation of 200/100, and have a full year to let it work
The stock market increases by 5% in the next year (i.e. value of your $3m investment grows to $3.15m), and the long/short (200/100) generated $1.2m of realized capital losses e.g. $3.15m of stock, with a cost basis of $1.8m (a $1.35m unrealized gain), and a realized capital loss of $1.2m that you can use for tax loss harvesting
Result for 2026: $0 capital-gains tax in the year you had a $1m realized gain in the tender, and $200,000 losses carried forward for future IPO sales
This is how “How to Pay No Tax on the Tender” becomes literal, not marketing.
Part 6 — Tax Strategies To Reduce INCOME Tax
Capital gains tax management rightfully gets a lot of the attention; more tools to tackle it and easier to implement them. Heavily reducing income tax (beyond the easy stuff like maxing your 401k) is the harder beast — and RSUs, bonuses, and some NSO exercise income all fall into this bucket. But there are a few legitimate tools that can materially reduce income taxes:
Real Estate Professional Status (REPS)
REPS allows real estate losses (mostly from depreciation) to offset W-2 and RSU income. It’s extremely powerful — and extremely hard to qualify for.
To realistically use it, you must be married and your spouse must:
Spend 750+ hours/year in real estate
And have more than half their working time in real estate
For you as a full-time SpaceX employee it is pretty much off limits. But if your spouse qualifies it can be one of the strongest income-tax shields available.
Trader-Status Hedge Fund Strategies (The Cleanest Tool)
Certain hedge fund structures generate ordinary losses, not capital losses. These can offset W-2 and RSU income directly. This is POWERFUL, and one of the only ways I’m aware of to reduce ordinary income without (i) buying property, (ii) managing tenants, or (iii) tracking hundreds of real-estate hours.
For SpaceX employees with predictable RSU income, this is often the most efficient income-tax reduction tool available. But it does come with a high bar to participate, and tax reduction limits:
Most hedge funds of this type are only available to “qualified purchasers” (must have $5m+ in investable assets); and typically require a minimum $500k investment
Typically need to be paired with a long/short investment strategy
Income reduction is capped; in 2026 it is likely a max of around $250k/person (around $500k for a married couple)
If you think this might apply to you, there are more details here
The Short-Term Rental Strategy (The “Loophole”)
Short-term rentals are treated differently than normal rentals. If you materially participate (often ~100 hours/year), you do not need REPS to use losses against W-2 income.
With bonus depreciation and renovations, it’s common to create:
$50k–$200k+ of paper losses
These directly offset RSUs, salary, and bonus income
A frequently overlooked mistake is letting the tax benefits “drive” here. You need to keep managing the STR after the first year. And most the tax benefits come in the first year. Which means you need to be OK with the time suck for multiple years, and the property should be a good investment (since you’re going to need to keep it for a while).
Part 7 — LOTS more Capital Gains Tools Come Online If/Once an IPO Occurs
Once SpaceX is public, entirely new tools to manage capital gains appear:
Exchange Funds
You contribute SpaceX shares into a limited partnership (dozens of others do the same with different company stock holdings). After ~7 years, you get diversified assets back without triggering immediate tax. Really helpful for:
Getting immediate diversification benefits
While delaying the recognition of capital gains from a sale
351 Exchanges
A unique one. When an ETF initially launches, the IRS allows individuals to contribute a semi-diversified portfolio as part of the ETF launch — and then they get shares in the very well diversified ETF. It’s becoming an increasingly popular tool, with multiple quality ETF providers launching a 351 exchange opportunities multiple times a year.
You get immediate liquidity when you do it this way (vs. an exchange fund), but you cannot cannot diversify as much as an exchange fund.
No single position can exceed 25%, and
Top-5 largest positions cant exceed 50%
But if you have other diversified (and ideally appreciated) stock holdings, this can be a powerful part of the toolkit.
Charitable Remainder Trusts (CRUTs)
A CRUT lets you:
Contribute concentrated equity into a custom setup personal charitable trust
You can sell shares inside the trust with no immediate tax from the sale
Instead, the capital gains from those sales are distributed back to you over multiple years in the future (however you choose to structure it)
And you get a charitable deduction in the year you create the CRUT for the portion you intend to eventually go to charity (min 10%)
Big benefit = you get to sell immediately within the trust, but stretch out the capital gains recognition for many years. If you combine that with a tax-loss harvesting strategy (including long/short), it can give you a lot more time to generate capital losses to offset the gains.
Opportunity Zones (Re-Opening in 2027)
Opportunity Zones got a refresh with the new tax rules that passed in 2025. They are nuanced, but at a high level you can:
Sell stock and recognize a capital gain
And if you then invest those realized gains into an OZ fund within the required time frame, you
Defer the recognition of the capital gains for many years
May qualify for a reduction in the amount of capital gains you pay when due in the future, and
If you meet the time requirements, any gains from the OZ investment are tax-free
At the heart of OZ funds, you need to make sure what you are investing in is a good investment. Most are real estate investments, and many can be solid. But that is the biggest priority to focus on. If you check that box however, the multi-year deferral of capital gains combined with tax-loss-harvesting can be very powerful.
Donating Highly Appreciated Stock
If you’re charitably inclined, donor-advised funds (DAFs) are one of the most tax-efficient tools available. With a DAF, you can:
Donate appreciated stock (instead of cash)
Eliminate capital gains tax on the donated shares
Take an immediate charitable deduction for the full fair-market value
Distribute grants to charities of your choice over time (days, or decades, in the future)
A quick example
You donate $100,000 of appreciated stock with a $20,000 cost basis
The $80,000 capital gain is never taxed
You receive a $100,000 deduction against your income (subject to AGI limits)
Donating is always a net negative to your net worth (you’re giving money away after all). But if you are charitably inclined, donating appreciated stock is a great tool to amplify your giving value and manage your taxes.
Borrowing at 4% or less
Once you have publicly tradable SpaceX shares or significant stock in a brokerage account, a relatively new tool (box spread borrowing) can come online. At a high level, it allows you to borrow funds at a sub-4% rate, and do so with tax benefits.
Part 8 — IPO Planning (Things We Haven’t Talked About)
We dove deep into taxes here. But many times optimizing for taxes isn’t the top priority (or even the second highest). A ton still exists to focus on when it comes to tender offers—and especially IPOs—including:
Planning for the future (what is the purpose of your cash/investments)
Investment portfolio design and risk tolerance (how much company stock concentration can you tolerate? And how much should you keep?)
Anticipated life changes (job change, relocation, career break, starting a company, starting a family)?
Do you want to sell at the IPO? Can you? How much? And with which shares?
Are you able to select your RSU withholding rate? If yes, how do you decide between 22% and 37%?
Developing a no-regrets selling plan post IPO
What’s Your Number — if you desire to stop working, how does your wealth stack up? And if you’re thinking of pulling the trigger, how do we adjust your tax and investment strategy around that?
What’s Next?
SpaceX concentration has probably been the best financial decision of your life so far. It would be hard not to be, given how much the company value (and stock price) has climbed over the last decade.
But…..at some point, it becomes your biggest risk.
If you want help navigating the wealth, taxes, and transition, I’m happy to help. Just get in touch.
Article Last Updated: December 10, 2025