Section 83(b) Election Tax Savings 2027 Calculator
Compare paying ordinary income tax now (83(b) election) vs ordinary tax later at higher value for restricted stock or founder equity in 2027.
What Is a Section 83(b) Election?
When you receive restricted stock subject to vesting, you can elect under IRC §83(b) to recognize income at GRANT (when value is low) instead of at VESTING (when value is high). The election locks in ordinary income on today's FMV minus what you paid; all future appreciation becomes long-term capital gain on sale. Critical deadline: must be filed within 30 days of grant — no exceptions. Source: IRC §83(b), Treas. Reg. §1.83-2. Last updated: May 2026.
When 83(b) Wins Big
Founders at grant: stock often has $0.001-$0.10 FMV → tax cost is pennies. Without 83(b), ordinary income at each vesting tranche could be $50K-$500K+ per tranche when company is valued. The $5 you save in ordinary tax at grant + the LTCG rate (20% + NIIT) vs ordinary rate (37% + NIIT) on $1M+ exit can mean $200K-$500K in tax savings.
Risk: Quit Before Vesting
If you leave the company before fully vesting, you forfeit unvested shares — but the 83(b) tax you already paid is NOT refundable. This is the main downside. For founders confident in their commitment, 83(b) is almost always correct. For non-founder employees with significant doubt about staying, the calculus is closer.
How to File the 83(b)
Mail signed election to the IRS service center where you file taxes, postmarked within 30 DAYS of grant (not 30 business days — calendar days). Use certified mail with return receipt. Provide a copy to your employer (especially important for S corp / LLC equity). Include a copy with your tax return for the grant year. Many founders miss the 30-day deadline and lose this strategy.
How to File a Section 83(b) Election Correctly
The election is a paper statement, not a form on the equity platform, and the filing mechanics are where most elections fail. Per the IRS Revenue Procedure 2012-29 sample election language, the statement must identify the taxpayer and taxpayer identification number, describe the property and the date transferred, state the restrictions it is subject to, give the fair market value at transfer and the amount paid for it, and confirm that copies were furnished as required. Four practical points follow. Send it to the IRS service centre where you file your return, within 30 days of the transfer date — not the vesting date, and not the offer-letter date. Use a method that proves the mailing date, because the 30 days is measured on filing and the postmark is your evidence. Give a copy to the company so its records and withholding match your position. Keep your own copy with the return for that grant year. The 30-day window cannot be extended, and a late election is simply not an election — the default treatment applies and each vesting tranche is taxed at its own value. Updated 2026-09-14.
Frequently Asked Questions
What's the 30-day 83(b) deadline?
Within 30 CALENDAR days of the grant date — not vesting date, not signing date. Must be postmarked by day 30. There is NO extension, no late filing, no relief. This is the single most missed deadline in startup equity. Use certified mail with return receipt for proof.
How much tax do I owe filing 83(b) for 100K founder shares at $0.05?
Income = 100,000 × $0.05 = $5,000. At a 37% top bracket = $1,850 federal tax. State tax adds more (CA = ~$650). Total ~$2,500 for an event that could save you $200K-$500K at a successful exit. Easiest math problem in startup finance.
Can I file 83(b) for stock options?
No — 83(b) is only for restricted stock and restricted stock units that transfer at GRANT (not just promise to deliver). ISOs and NSOs are options, not stock, until exercised. You can file 83(b) on the spread when EARLY EXERCISING an option before vesting, which is a common founder strategy. Different rules apply.
What happens if I leave before vesting after filing 83(b)?
You forfeit unvested shares — and the 83(b) tax you already paid is NOT refundable. The IRC §83(b)(2) explicitly denies any loss deduction on forfeiture. This is the main risk. If you're confident in your commitment, the risk is acceptable; if not, weigh carefully.
Does 83(b) affect AMT?
Generally no for non-option restricted stock. The 83(b) election creates ordinary income at FMV minus what you paid — that flows into regular taxable income (not as an AMT preference). For ISO early exercise + 83(b), the bargain element IS an AMT preference, complicating the analysis.
Do I need a 409A valuation for 83(b)?
Strongly recommended for private company stock. A 409A valuation from a qualified appraiser establishes a defensible FMV — protecting you from IRS challenge that the grant-date FMV was understated. Public company shares use market price. For startups, get the 409A done in advance to support the 83(b) filing.
How do I actually file an 83(b) election?
It is a paper statement mailed to the IRS service centre where you file your return, not a form on your equity platform. It must identify you and your taxpayer identification number, describe the shares and the transfer date, state the restrictions, and give the fair market value at transfer and the amount you paid. Send it with proof of mailing date, give a copy to the company, and keep a copy with that year's return. IRS Revenue Procedure 2012-29 contains sample wording you can follow.
What happens if I miss the 30-day 83(b) deadline?
The election is lost — there is no extension and no late-filing relief. The default treatment then applies: each tranche is taxed as ordinary income at its fair market value when it vests, so a rising share price means a rising tax bill spread across the vesting schedule. The 30 days runs from the transfer or grant date, not from vesting and not from the offer letter, which is why the deadline is missed so often.