Jun 1, 2026
You might have heard about a sneaky trick the wealthy use to avoid taxes. The aptly named ‘buy, borrow, die’ strategy was developed by Professor Edward J. McCaffery in the 1990s to describe how rich people get — and stay — rich by paying less in taxes.
Despite widespread chatter about the strategy, Jeff Bezos claims it’s not a real strategy.
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“There’s no truth to this ‘buy, borrow, die’ thing,” Bezos told CNBC’s Andrew Ross Sorkin in May 2026. “I don’t even know where this comes from.”
This strategy has also come under fire from Sens. Elizabeth Warren and Ron Wyden, who insist the loophole should be closed.
“America’s tax code is riddled with loopholes that allow the ultra-wealthy to get away without paying their fair share, while working families have to play by a different set of rules and pay taxes out of each paycheck,” Wyden said.
So what is it and how does it work?
How does buy-borrow-die work?
‘Buy, borrow, die’ is a strategy in which wealthy people accumulate appreciating assets, borrow against them and use the estate to pay off the debt after they die. It works because of how taxes are assessed: not every financial move is a taxable event.
Buy a car? Generally, you’ll pay taxes. Earn money? Pay taxes. Sell $62 billion in stocks? That’s a taxable event. But if you borrow money against those stocks — as Elon Musk did to buy Twitter in 2022 — that’s debt, not income, and it isn’t taxed.
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In addition to avoiding taxable events, the ‘buy, borrow, die’ strategy also allows whatever assets you borrow against to continue to appreciate, making you even more money. And while you’ll obviously pay interest on the loan, for the uber-wealthy, the math can still work out in their favor.
The highest income tax bracket, for those earning over $640,601, is 37% but interest rates on loans are typically much lower. In Musk’s case, he would likely have paid capital gains tax had he sold his stocks, which are typically taxed at around 20%—still higher than most interest rates.
So while Bezos might not use this strategy, there are definitely some billionaires who do. And this type of loophole isn’t available to most of us.
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Not a billionaire? Here’s how you can save on taxes
Most of us can’t pledge billions in stock as collateral for a loan. But there are still plenty of legal ways to keep more of what you earn.
Leverage home equity
If you own a home, you may be able to borrow against it through a home equity loan or home equity line of credit (HELOC). Like the buy-borrow-die strategy, this is debt, not income, so it isn’t typically taxed. You’ll still pay interest, but rates are typically lower than credit cards or personal loans, and the interest may even be tax-deductible if the funds are used to improve the home.
Maximize tax-advantaged accounts
One of the simplest ways to reduce your taxable income is to contribute to accounts designed for it. A 401(k) or traditional IRA lowers your taxable income today, while a Roth IRA grows tax-free for later.
Health Savings Accounts (HSAs) are particularly powerful—contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses aren’t taxed either. If your employer offers dependent care benefits, you can shield an additional few thousand dollars from taxes.
Hold investments longer
Selling an investment you’ve held for less than a year triggers short-term capital gains taxes, which are taxed as ordinary income—potentially as high as 37%. Hold that same investment for more than a year, and you’ll pay long-term capital gains rates instead, which top out at 20% for most investors. Time in the market isn’t just a good investing strategy; it’s a good tax strategy too.
Consider itemizing your deductions
Most Americans take the standard deduction—$16,100 for single filers and $32,200 for married couples filing jointly in 2026. But if your deductible expenses exceed that amount, itemizing could save you money. Eligible deductions include state and local taxes (up to $10,000), mortgage interest, charitable donations, and unreimbursed medical expenses above a certain threshold.
The ultra-wealthy didn’t write the tax code—they just know how to read it. You don’t need a billion-dollar portfolio to do the same, just a little planning and a strategy to leverage the right accounts.
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Danielle is a personal finance writer whose work has appeared in publications including Motley Fool and Business Insider. She believes financial literacy key to helping people build a life they love. She’s especially passionate about helping families and kids learn smart money habits early.
