Your stock grant
Tax rates
• Ordinary income rate: federal marginal bracket (22%–37%)
• LTCG rate: 0%, 15%, or 20% depending on income
• State tax: effective state income tax rate
• NIIT (3.8%) not included; add to LTCG rate if applicable
$16,150
Over the life of your $100 stock grant, filing an 83(b) election reduces your total tax by $16,150.
Lifetime tax comparison
Without 83(b)
42.0% effective
25.0% effective
With 83(b)
42.0% effective
25.0% effective
Break-even sale price
Important risks
- The 83(b) election is irrevocable — you cannot undo it if the stock declines or the company fails.
- You must pay tax at grant on the FMV spread, even though the stock is not yet vested and may be illiquid.
- If the company fails, you cannot recover the tax paid at grant. You may claim a capital loss, limited to offsetting capital gains plus $3,000/year of ordinary income.
- You must file within 30 calendar days of the grant date — no exceptions, no extensions.
What is How to Use the 83(b) Election Calculator?
A Section 83(b) election lets you pay ordinary income tax on restricted stock at grant time instead of vesting time. This converts all future appreciation from ordinary income to long-term capital gains, which can save tens of thousands of dollars at early-stage startups.
How to Use
- Enter the number of shares in your restricted stock grant
- Input the strike price (amount you paid) and FMV at grant
- Estimate the FMV at vesting and your expected sale price
- Set your ordinary income and capital gains tax rates
- Compare total lifetime tax with and without the 83(b) election
Why Use This Tool?
Tips & Best Practices
- File within 30 days of grant — the IRS does not accept late 83(b) elections under any circumstances
- At early-stage startups, FMV at grant is often near zero, making 83(b) almost always beneficial
- 83(b) does NOT apply to standard RSUs — only to restricted stock awards (RSAs) and early-exercised options
- The election is irrevocable — if the company fails, you cannot recover the tax paid at grant
- Mail your 83(b) election by certified mail with return receipt and keep the receipt indefinitely
Frequently Asked Questions
What is a Section 83(b) election?
A Section 83(b) election lets you pay ordinary income tax on the fair market value of restricted stock at grant time instead of at vesting. This converts all future appreciation from ordinary income to long-term capital gains.
When should I file an 83(b) election?
File an 83(b) election when the value at grant is very low (common at early-stage startups) and you expect significant appreciation before vesting. The election must be filed within 30 days of the grant date — no exceptions.
Can I file an 83(b) election on RSUs?
No. Standard RSUs are not eligible for 83(b) because there is no transfer of property at grant. 83(b) applies to restricted stock awards (RSAs) and early-exercised options where you receive stock before vesting.
What happens if I file 83(b) and the stock becomes worthless?
If the stock becomes worthless, you cannot recover the tax paid at grant. You may claim a capital loss, but it is limited to offsetting capital gains plus $3,000 of ordinary income per year. The 83(b) election is irrevocable.
What is the 30-day deadline for 83(b)?
You must file the 83(b) election with the IRS within 30 calendar days of the grant date (or early-exercise date). This deadline is absolute with no exceptions. Mail by certified mail and keep the receipt indefinitely.