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.
Frequently Asked Questions
What's the 30-day 83(b) deadline?
Within 30 CALENDAR days of the grant date \u2014 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 \u00d7 $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 \u2014 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 \u2014 and the 83(b) tax you already paid is NOT refundable. The IRC \u00a783(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 \u2014 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 \u2014 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.