Since its founding in 2002, Elon Musk’s SpaceX has emerged as the leading force in commercial spaceflight and a key launch provider for the U.S. government. A recent investigation suggests its dominance may stem—at least in part—from two decades of federal tax avoidance.
Internal company documents reviewed exclusively by The New York Times show that SpaceX can exploit net operating loss (NOL) carryforwards, a U.S. tax provision that lets companies use past losses to offset future taxable income. The documents indicate that SpaceX had accumulated nearly $5.4 billion in tax losses by the end of 2021, allowing it to avoid federal taxes on $5.4 billion of future income. The benefit is available to all companies, and in 2017, President Trump eliminated its expiration date. According to The Times, this means SpaceX can apply nearly $3 billion in past losses against future taxable income for as long as it wants.
Gizmodo reached out to SpaceX for comment but did not receive a response by the time of publication.
In June, Musk took to X—his own social media platform—to declare that SpaceX’s revenue will exceed NASA’s entire budget next year, capping off at a whopping $15.5 billion. The company’s 2024 revenue was estimated at $13.1 billion, up from $8.7 billion in 2023, Payload reports.
SpaceX is one of several multi-billion-dollar tech companies that have propelled Musk to the global stage and made him the richest man in the world. Their growth has been largely dependent on federal funding.
In February, a Washington Post analysis found that Musk and his businesses have received at least $38 billion in government contracts, loans, subsidies, and tax credits over the last 20-some years. Another 52 ongoing contracts across seven government agencies, including NASA, the Department of Defense, and the General Services Administration, could potentially pay Musk’s companies an additional $11.8 billion over the next few years, WaPo reported.
Most of these contracts are between SpaceX and NASA or the DoD. The documents reviewed by The New York Times indicated that nearly 84% of SpaceX’s 2020 revenue and 76% of its 2021 revenue stemmed from federal contracts.
Tax experts told The Times that avoiding more than $5 billion in federal income taxes was substantial for a company that relies so heavily on government contracts. The documents suggest SpaceX has paid some income tax to foreign and state governments since 2002, but probably not to the U.S. government, according to The Times.
SpaceX’s alleged ability to shield billions in future profits from the IRS presents a troubling paradox: a company that owes much of its growth to federal funding may give comparatively little back to public coffers. It doesn’t appear that this one-sided relationship will come to an end anytime soon, as SpaceX has become an integral part of the U.S. space economy and national defense.
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