83(b) Election Calculator 2026

What is 83(b) Election Calculator?

A Section 83(b) election, authorized under IRC § 83(b), allows you to pay ordinary income tax on the fair market value of restricted stock at the time of grant rather than at vesting. When you receive restricted stock that is subject to a substantial risk of forfeiture (i.e., it vests over time), the default tax treatment is to recognize ordinary income equal to the FMV minus what you paid at each vesting date. By filing an 83(b) election within 30 days of the grant, you accelerate that income recognition to the grant date — when the FMV is typically much lower, especially at early-stage startups. The key benefit: all future appreciation from the grant-date FMV to your eventual sale price is taxed as long-term capital gains (0%, 15%, or 20%) rather than ordinary income (up to 37%). The savings come from the spread between your ordinary rate and the LTCG rate on the appreciation that occurs between grant and vest. For a typical startup employee with a 37% ordinary rate and a 20% LTCG rate, every dollar of appreciation shifted from ordinary to capital gains saves 17 cents. The election is irrevocable — if the stock declines or the company fails, 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 must be filed with the IRS within 30 calendar days of the grant date; there are no exceptions or extensions. It applies only to restricted stock awards (RSAs) and early-exercised stock options — not to standard RSUs.

How to Use

1. Enter the number of shares in your restricted stock grant (found on your grant agreement).
2. Input the strike price (amount you paid per share, if any) and the FMV at grant per share (from your company's 409A valuation).
3. Estimate the FMV at vesting per share and your expected sale price — use the latest 409A or a reasonable projection.
4. Set your ordinary income tax rate (federal marginal bracket, 22%–37%) and long-term capital gains rate (0%, 15%, or 20% depending on taxable income).
5. Enter your state income tax rate for a complete picture.
6. Click Calculate to compare total lifetime tax with and without the 83(b) election, including the break-even sale price.

Tips & Best Practices

• File within 30 days of grant — the IRS does not accept late 83(b) elections under any circumstances (IRC § 83(b)(2)).
• At early-stage startups, FMV at grant is often near zero (e.g., $0.001/share), making 83(b) almost always beneficial because the tax at grant is negligible.
• 83(b) does NOT apply to standard RSUs — only to restricted stock awards (RSAs) and early-exercised options (where you exercise before vesting).
• The election is irrevocable — if the company fails, you cannot recover the tax paid at grant. You may claim a capital loss limited to $3,000/year against ordinary income.
• Mail your 83(b) election by certified mail with return receipt and keep the receipt indefinitely — the IRS does not send confirmation.
• Send one copy to the IRS with your tax return, keep one for your records, and provide one to your employer.

Frequently Asked Questions

Real-world Examples

Shares:              10,000
Strike price:        $0.01/share
FMV at grant:        $0.50/share
FMV at vest:         $10.00/share
Sale price:          $50.00/share
Ordinary rate:       37%
LTCG rate:           20%
State rate:          5%

WITHOUT 83(b):
Income at vest:      ($10.00 − $0.01) × 10,000 = $99,900
Ordinary tax:        $99,900 × 42% = $41,958
Capital gain:        ($50.00 − $10.00) × 10,000 = $400,000
CG tax:              $400,000 × 25% = $100,000
Total tax:           $141,958

WITH 83(b):
Income at grant:     ($0.50 − $0.01) × 10,000 = $4,900
Ordinary tax:        $4,900 × 42% = $2,058
Capital gain:        ($50.00 − $0.50) × 10,000 = $495,000
CG tax:              $495,000 × 25% = $123,750
Total tax:           $125,808

Tax savings from 83(b):  $16,150
After-tax with 83(b):    $374,192
After-tax without 83(b): $358,042
Break-even sale price:   N/A (83(b) always better when FMV rises)

Key insight: The $16,150 savings comes from shifting
$95,000 of appreciation ($10.00 − $0.50) × 10,000
from 42% ordinary rate to 25% CG rate.
$95,000 × (42% − 25%) = $16,150

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