Because he wasn’t married, had no dependents, and put a good chunk of his money—about 40 percent—into IRAs and health savings accounts, he discovered that he could make $36,000 a year and still avoid paying federal income taxes.
After the money was taken out for the retirement and health savings, Gross was left with about $20,000 a year. None of that went to Uncle Sam.
It’s still not a whole lot of money, especially in San Francisco, where the average rent in October was $3,413 a month, but Gross made it work. During the early years, he split a one-bedroom apartment with his then-girlfriend, and each paid $500. He started cooking meals from scratch and shopping at farmer’s markets, and brewing his own beer (which also helped him avoid federal excise tax on alcoholic beverages). He started going to the library more and exchanging skills with people—teaching them web programming if they’d teach him about meat curing. He bought stuff used, or got it on Freecycle.
It wasn’t as hard as he thought it would be, Gross says.
“For most people, when your salary rises to a certain level, your expenses rise along with it,” he said. “So when you imagine working not quite so much, you just think, ‘Where would I get that money?’ My recommendation—start paring down, start simplifying, squirrel away that money that you’re spending.”
The amount of money Americans can earn and still avoid paying income taxes varies by their deductions, marital status, and expenses. In 2014, for example, a single, non-blind person under 65 with no dependents, who didn't put money into retirement or health funds, could earn $10,150 without paying any income tax, according to the National War Tax Resistance Coordinating Committee. But, as Gross figured out, you can earn a lot more than 10 grand if you can take deductions for things like commuting expenses and tuition fees, which reduce your taxable income, or if you put money into health savings accounts and an IRA.
I was curious about Gross’s financials, but even more curious about what he did all day. After all, even the richest Silicon Valley entrepreneur, who doesn’t have to work another day of his life often gets restless. Even if he doesn’t miss the money, doesn’t Gross get bored?
“I think I take that sort of pleasure from a variety of things now rather than a single thing,” he said. “If there was one thing that excited me, I would still be able to do that, potentially, if it didn’t earn any income, but as it is, I like having a diversity of interests, move from thing to thing as it strikes me.”
Gross now lives in San Luis Obispo, in central California, near his parents and with his brother, who works a more conventional job. He isn't married, and doesn't have kids—and doesn't plan to have them. Instead, he spends his time writing and researching projects he’s interested in: a book compiling the political writings of Henry David Thoreau, a compilation of works about American Quaker war tax resistance. He participates in a weekly discussion group modeled on Benjamin Franklin’s Junto club for mutual improvement, and has a group of close friends he spends time with. He cooks a lot—meals that he says are as good as the ones he would spend money on when he lived in San Francisco, in the days before he decided to change his lifestyle.