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Meta Strikes Deal to Keep Zuckerberg in California Amid Billionaire Tax Threat

Updated 6:04 AM ET · 8:15 PM ETConfirmed

Business Desk

In Short: Meta has reached an agreement with Zuckerberg to help him pay a proposed California billionaire tax without losing control of the company.

Meta CEO Mark Zuckerberg has secured a deal with the company to help him pay a proposed California billionaire tax without losing control of Meta, according to regulatory filings published this week. The agreement follows concerns over Proposition 40, a ballot measure that would impose a one-time 5% tax on the wealth of billionaires if approved by voters.

Zuckerberg, the world's sixth-richest person with a net worth estimated at around $240 billion, could face a substantial tax bill that might require him to sell company shares. The proposed tax could produce a multibillion-dollar liability for Zuckerberg, potentially leaving him with an estimated $11 billion (£8.21 billion) bill, according to the Ibtimes (United Kingdom).

Under the agreement, Zuckerberg will be permitted to sell immediately up to 20% of the Class C shares he receives, representing 10% of his overall economic interest in Meta. Meta plans to issue a new class of non-voting Class C common stock in January 2027, which could give Zuckerberg greater flexibility to raise cash without immediately reducing his voting control.

The arrangement includes restrictions on Zuckerberg's remaining Class C shares that will gradually expire during an eight-year period, subject to the conditions of his agreement with Meta. Zuckerberg has committed to remain a resident of California, or the state where Meta maintains its headquarters, and continue leading the company for eight years, unless there are material unforeseen circumstances that would render it prudent or advisable for him to reside elsewhere.

The Service Employees International Union-United Healthcare Workers West is backing the wealth tax proposal, which applies to roughly 200 billionaires who have resided in California as of January 1, 2026, and could raise $100 billion. Zuckerberg has received an annual salary of $1 (£0.75) since 2013, according to Meta's regulatory filings.

Zuckerberg considered moving out of California over the proposed billionaire wealth tax, which could reduce the amount of control he has over Meta, a recent regulatory filing shows. The ballot measure, known as Proposition 40, would levy a one-time, 5% tax on the wealth of Californians living in the state as of January 1, 2026.

The deal also includes the creation of a new class of non-voting shares that could give Zuckerberg greater flexibility to raise cash without immediately reducing his voting control. The stock deal would give the CEO $20 billion in 'immediate liquidity' to cover the tax by selling stock without losing control of Meta, the filing said.

Zuckerberg launched Facebook from a Harvard dorm in 2004, took it public in 2012, renamed the company Meta in 2021, and remains its controlling shareholder through dual-class stock. Most of his wealth is tied to his approximately 13% ownership stake in Meta, the parent company of Facebook and Instagram.

What this adds

Background

What's confirmed

• Zuckerberg will be permitted to sell immediately up to 20% of the Class C shares he receives, representing 10% of his overall economic interest in Meta.
• Meta plans to issue a new class of non-voting Class C common stock in January 2027.
• Under the agreement, Zuckerberg has committed to remain a resident of California, or the state where Meta maintains its headquarters, and continue leading the company for eight years.
• SACRAMENTO, Calif. (AP) — Mark Zuckerberg made a deal with Meta's board to help him pay a proposed California tax on billionaires without losing his ownership stake in the company he founded, according to regulatory filings published this week.
• Zuckerberg is the sixth-richest person in the world with a net worth estimated at more than $220 billion, according to Forbes.
• Meta CEO Mark Zuckerberg listens as President Donald Trump speaks in the East Room of the White House in Washington, Tuesday Sept.

What's still developing

• "I believe this is the first billionaire tax - meaning a wealth tax that is targeting a very extreme percentile of the wealth distribution," says Francesco Trebbi, a public policy professor at the University of California, Berkeley.
• One billionaire businessman says he's brought jobs to California, but the proposition made him feel "a little bit like I wasn't wanted".
• 2008 — Becomes world’s youngest self-made billionaire (age 23) 2015 — Chan Zuckerberg Initiative pledge (99% of Meta stake over lifetimes) 2016–2018 — Cambridge Analytica scandal and congressional scrutiny 2023–2025 — Threads launch; Llama open-weight models; “Year of Efficiency” cost cuts then AI reinvestment Oct.
• California Post reported that Zuckerberg had discussed selling his Palo Alto compound, estimated to be worth $110m, as part of plans to establish residency outside California.
• The compromise came after Zuckerberg told the board he was considering selling his Palo Alto home last month in anticipation of the proposed tax.
• “It will expand our funding tools and give us flexibility to invest behind the unprecedented momentum we’re seeing across every part of our business driven by AI,” Meta Chief Financial Officer Susan Li said on an earnings call.

Sources

• CEO Todaylink
• Los Angeles Timeslink
• Ibtimeslink
• BBClink
• Ottumwacourierlink
• Fox Businesslink
• Economictimeslink
• Readtheprofilelink
• Washingtonexaminerlink
• Indiaweeklylink
• Businessinsiderlink
• Thetimestribunelink
• Thestarlink
• WarpBeat — background on Zuckerberg wins Meta deal to help him foot bill for possible California billionaire tax link
• WarpBeat — background on Meta agrees to let Mark Zuckerberg remain in California amid proposed billionaire wealth tax link
• Fox Business — video link