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📝 Section 83(b)

83(b) Election Tax Calculator (2026)

A Section 83(b) election lets you pay ordinary tax on restricted equity now, on today’s low value, instead of at vesting on a potentially much higher value. Compare both scenarios and see the tax you could save.

● Grant vs vesting tax ● 30-day IRS deadline ● Founders & early exercise

📝 83(b) election comparison

Equity compensation

What an 83(b) election does

When you receive equity that vests over time — founder shares, restricted stock, or early-exercised options — the default rule of IRC §83(a) taxes you as it vests, on the value at each vesting date. If the company grows, that means paying ordinary income tax on a rising number every year. A Section 83(b) election flips this: you choose to be taxed now, on the entire spread between what you paid and today’s value, which for early-stage equity is often nearly zero.

Why founders almost always file

If you buy 100,000 founder shares at $0.01 when they are worth $0.01, the spread is $0 — so an 83(b) election locks in a taxable amount of nothing and starts your long-term capital-gains holding clock immediately. Without it, every tranche that vests as the company’s value climbs is taxed as ordinary income. The election converts what would have been ordinary income into future capital gain.

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Worked example: You early-exercise 100,000 shares at $0.01 (paying $1,000) when the value is $0.05. With an 83(b) election you report a $4,000 spread today: at a 24% rate that is just $960 of tax. Skip the election and the same shares vest later at $5.00 — a $499,000 spread taxed as ordinary income, roughly $119,760. The election shifts about $495,000 from ordinary income into capital-gains territory.

The 30-day deadline is absolute

You must mail the 83(b) election to the IRS within 30 days of receiving the stock — there are no extensions and the deadline is strictly enforced. Send it by certified mail and keep the receipt. Once filed, it is generally irrevocable.

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The risk: tax you pay now is not refundable if the shares later become worthless or you leave before vesting. The election is a near-automatic win when the current spread is tiny, but a real gamble when you early-exercise options with a large built-in spread.

If you are weighing an early exercise of options, pair this with the ISO AMT calculator (an 83(b) does not remove AMT on ISOs) or the NSO tax calculator. To estimate the eventual capital-gains tax on the appreciation, use the capital gains tax calculator.

Questions

83(b) Election Calculator 2026 FAQ

What is a Section 83(b) election?

It is a one-page statement to the IRS electing to be taxed on restricted equity at the time of grant or early exercise — on today’s value — instead of as it vests. It converts future appreciation from ordinary income into capital gain and starts your long-term holding period immediately.

When is the 83(b) deadline?

You must file within 30 days of receiving the stock (the grant or early-exercise date). The deadline is strict, with no extensions. Send the election by certified mail with return receipt and keep proof; also provide a copy to your company.

When should I file an 83(b) election?

It is almost always worthwhile when the current spread between your purchase price and fair market value is very small, such as founder shares or a very early-stage early exercise — you lock in little or no tax and start the capital-gains clock. It is riskier when there is already a large built-in spread, because the tax you pay now is not refundable if the equity later loses value or you forfeit it.

Does an 83(b) election avoid AMT on ISOs?

No. For incentive stock options, the bargain element at exercise is still an AMT preference item even with an 83(b) election. The election affects the timing of regular income recognition on the shares, not the AMT add-back. Use an ISO AMT calculator to model that separately.

Mustafa Bilgic
Reviewed & maintained by
Mustafa Bilgic — Editor, SalaryCalculator.us

Section 83(b) rules follow Internal Revenue Code §83 and IRS regulations; see the IRS sample election procedure in Rev. Proc. 2012-29. Capital-gains treatment follows IRC §1.

  • Sources: IRC §83(b) and Treas. Reg. §1.83-2 · IRS Rev. Proc. 2012-29 (sample 83(b) election) · IRS Publication 525.
  • 🔄 Last updated June 27, 2026 · Tax year 2026

Disclaimer: This tool is educational and is not legal or tax advice; the operator is not an attorney or CPA. An 83(b) election is irrevocable and the 30-day deadline is unforgiving — consult a qualified tax adviser before filing.

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