An 83(b) election lets a recipient of restricted stock choose to pay tax on the grant-date value now, instead of the (often much higher) vesting-date value later — a bet that only pays off if the stock actually vests.
How it works
Filing an 83(b) election taxes the grant-date fair market value at ordinary rates immediately. Skipping it defers tax until vesting, taxed on the vesting-date value instead — usually higher for a growing company, which is the entire appeal of filing early.
What this does not include
This compares only the ordinary-income tax at each point — it doesn’t model the eventual capital gains treatment on a later sale, or the real risk that filing 83(b) and then forfeiting the stock (leaving the company early) means the tax already paid is not refundable.
How to use this calculator
- Enter shares granted, the grant-date FMV, and expected vesting-date FMV.
- Enter your ordinary income tax rate.
Frequently asked questions
What’s the deadline to file an 83(b) election?
Within 30 days of the stock transfer — per Treasury Regulation §1.83-2, this deadline is strict and there’s generally no relief for missing it.
Is the election reversible?
No — it’s irrevocable, which is exactly why the risk of forfeiture or the company failing matters so much before filing.
Does this apply to stock options?
No — 83(b) applies to actual restricted stock (property transferred now, subject to forfeiture), not to options, which have their own separate tax rules covered by this site’s NSO vs. ISO calculator.
