83(b) Election Calculator
Calculate 83(b) election impact — pay tax now on low-FMV stock vs pay tax at each vest at higher FMV. The 30-day decision that saves startup founders and early employees $100K-$1M+ in taxes.
What Is the 83(b) Election?
IRC §83(b) lets you elect to pay tax on restricted stock at GRANT instead of at VESTING. Required when stock is subject to vesting. Without 83(b): each vest tranche taxed as ordinary income at then-FMV. With 83(b): all tax paid upfront at low grant FMV; future appreciation is capital gains. Must file with IRS within 30 DAYS of grant — no extensions. Most expensive deadline in startup world.
When 83(b) Saves Massive Tax
Best scenario: startup founder/early employee with low grant FMV ($0.001-$0.10/share) that will appreciate 1,000x-100,000x over 4 years. Without 83(b): each vest taxed at then-FMV which could be $50-$500/share = ordinary tax on huge gain at each vest. With 83(b): tax once at grant FMV (often pennies × 1M shares = $100-$10K tax), then all future gain is capital. Savings can hit $1M+ on successful exits.
When 83(b) Hurts You
Bad scenario: company fails. You paid tax on FMV at grant but shares are now worthless. You CANNOT recover the tax paid. Pre-revenue startup with 1M shares × $0.10 = $100K tax bill, then company dies = $100K lost forever. Mitigate by negotiating low grant FMV early, and only file 83(b) if you'd happily own the shares at the grant FMV cash price.
Filing Mechanics — Don't Mess Up
Send signed 83(b) election form via USPS Certified Mail with return receipt to IRS service center where you file taxes. Within 30 DAYS of grant (calendar days, not business). Include grant details, FMV, paid amount, shares, restrictions. Keep certified mail receipt FOREVER — IRS regularly claims they didn't receive elections. Send copy to your employer for their tax records. State filing may also be required (CA, NY).
Sources: IRC §83(b), Treasury Reg §1.83-2. Last updated: May 2026. Not tax advice — consult before filing.