About the 83(b) Election Calculator
When you receive restricted stock or early-exercise options into unvested shares, the default US rule (Internal Revenue Code section 83(a)) taxes the spread between the shares’ fair market value and what you paid as ordinary income when they vest. A section 83(b) election lets you choose to be taxed on that spread at the time of transfer instead. If the shares are worth little today and rise in value before vesting, the election can turn what would have been ordinary income into long-term capital gain and start your capital gains holding period years earlier.
This 83(b) election calculator compares the two paths for founders, early employees and anyone granted restricted stock awards: the tax due up front with the election, the ordinary income and capital gain under each path, the total tax when you finally sell, and the net difference. It also shows the filing deadline — the election must be made no later than 30 days after the date the property is transferred to you.
Rules reflect the Internal Revenue Code and regulations as reviewed for the 2026 tax year. The comparison uses the marginal tax rates you enter (include state tax if you like) and assumes all shares vest on one date, the sale happens after vesting, and capital losses offset other gains at the same rate. It ignores the time value of paying tax early, the 3.8% net investment income tax and AMT; an 83(b) election cannot be used for stock options themselves, only for shares already transferred.
With the default inputs, the tax saved with 83(b) election is $14,000.00. Change any value above to recalculate instantly.
How to use the 83(b) election calculator
- 1Enter the number of shares, the price you paid and the fair market value at grant.
- 2Estimate the value per share at vesting and when you expect to sell.
- 3Enter the vesting period and how long you will hold after vesting.
- 4Enter your marginal ordinary and long-term capital gains rates.
- 5Enter the grant date to see the 30-day filing deadline, then compare the totals.
Formula and method
Without an election, section 83(a) taxes the value of the shares at vesting minus what you paid as ordinary compensation income, your cost basis becomes the vesting-date value, and your capital gains holding period starts at vesting. With an 83(b) election, the spread is measured on the transfer date instead, your basis is what you paid plus the income you reported, and the holding period starts at transfer — so later growth is taxed only when you sell, as capital gain.
The capital gain under each path uses the long-term rate when the shares are held more than one year from the start of that path’s holding period, and the ordinary rate otherwise. A negative gain is treated as a loss that offsets other gains at the same rate (in practice, net capital losses above $3,000 a year must be carried forward). The deadline is the transfer date plus 30 days.
- n
- Number of shares
- paid
- Price paid per share
- FMVgrant, FMVvest
- Fair market value per share at transfer and at vesting
- t_ord, t_cg
- Ordinary income and applicable capital gains tax rates
Worked examples
Restricted stock award at $0.50, worth $4 at vesting
Without the election, $80,000 of value at vesting is taxed at 35% ($28,000) and the $120,000 later gain at 15% ($18,000). With the election you pay $3,500 now on $10,000, then 15% on a $190,000 gain ($28,500) — $32,000 in total, saving $14,000.
Founder buying 1 million shares at fair value
Because the founder paid full value ($0.001), the election costs nothing today. Without it, $1,999,000 would be ordinary income at vesting. With it, the whole $4,999,000 gain is long-term capital gain, saving about $339,830.
When the stock falls: the election backfires
Paying $9,600 up front on $30,000 of income looks bad when the shares drop to $1.50. The $15,000 capital loss only offsets $2,250 of tax at 15%, so the election costs $2,550 more than waiting.
Frequently asked questions
What is an 83(b) election?+
It is a choice under Internal Revenue Code section 83(b) to include the value of restricted property in income in the year it is transferred to you, rather than when it vests. You pay ordinary income tax on the spread now, and later growth is taxed as capital gain when you sell.
What is the deadline to file an 83(b) election?+
Section 83(b)(2) requires the election no later than 30 days after the date the property is transferred to you. There is no extension, and a missed deadline cannot be fixed. If day 30 falls on a weekend or legal holiday, IRC §7503 makes the next business day timely, but file promptly and keep proof of mailing.
How do I file an 83(b) election?+
Complete and sign IRS Form 15620 (Section 83(b) Election) or an equivalent written statement and file it with the IRS office where you file your return, within 30 days of the transfer. Treasury Regulation 1.83-2 also requires you to give a copy to your employer (and to the transferee if different). Keep a copy and proof of the mailing date.
What happens if I file an 83(b) and then leave before vesting?+
You forfeit the unvested shares and get no deduction for the income you reported. Under Treasury Regulation 1.83-2(a) the forfeiture is treated as a sale with a loss equal only to what you paid for the shares minus any amount you received back. That is the main risk of the election.
When does an 83(b) election make sense?+
It is most attractive when the spread at transfer is zero or small — for example founders buying shares at fair value or early exercise at a strike equal to the current value — and you expect the value to rise and are likely to stay until vesting.
Can I file an 83(b) election for RSUs or stock options?+
No. RSUs are a promise to deliver shares later, not a transfer of property, and an 83(b) cannot be made for a stock option itself. You can file one when you early-exercise options into restricted shares, because the shares are then transferred to you.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.
Sources
- 26 U.S. Code § 83 — Property transferred in connection with performance of services
- 26 CFR § 1.83-2 — Election to include in gross income in year of transfer
- IRS Form 15620 — Section 83(b) Election (Rev. April 2025)
- 26 U.S. Code § 7503 — Time for performance of acts where last day falls on Saturday, Sunday, or legal holiday
- IRS Publication 525 — Taxable and Nontaxable Income (Restricted Property)