Section 83(b) Election Calculator 2026 β Should You File?
Calculate whether to file a Section 83(b) election for restricted startup stock. Compare tax now vs tax at vesting, savings if stock rises, and risk if it falls.
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Fair market value per share at grant date (409A valuation) $
Price you pay per share (RSAs: often $0.001) $
Expected price per share when fully vested Typical startup vesting: 4 years with 1-year cliff
$
WITH 83(b) Election
WITHOUT 83(b) Election
Tax Comparison Summary
| Item | With 83(b) | Without 83(b) |
|---|
How This Section 83(b) Calculator Works
Enter your share count, the 409A fair market value per share at grant, your exercise/purchase price, and the expected FMV at vesting. The calculator shows the tax you'd owe now with an 83(b) versus the tax you'd owe at vesting without one β and the potential savings if your stock appreciates.
With 83(b) Election
Taxable income NOW = (FMV at grant β exercise price) Γ shares
Tax now = taxable income Γ ordinary income rate
Future appreciation = LTCG (if held >1 year from grant date)
LTCG tax = (exit price β FMV at grant) Γ shares Γ LTCG rate
Tax now = taxable income Γ ordinary income rate
Future appreciation = LTCG (if held >1 year from grant date)
LTCG tax = (exit price β FMV at grant) Γ shares Γ LTCG rate
Without 83(b) Election
At each vesting event: ordinary income = (FMV at vest β exercise price) Γ shares vesting
Tax at vesting = ordinary income Γ ordinary rate (can be very high if stock appreciated)
Holding period starts at each vesting date (not grant date)
LTCG only applies if held >1 year AFTER each vesting event
Tax at vesting = ordinary income Γ ordinary rate (can be very high if stock appreciated)
Holding period starts at each vesting date (not grant date)
LTCG only applies if held >1 year AFTER each vesting event
Example β Startup Founder
1M shares, $0.01 FMV at grant, $0.001 exercise price, expected $1.00 at vesting (4 yr), $150K other income:
With 83(b): Tax now = ($0.01 β $0.001) Γ 1M Γ 32% = $2,880 | Future gains: LTCG
Without 83(b): Tax at vesting = ($1.00 β $0.001) Γ 1M Γ 32% = $319,680
83(b) saves $316,800 if stock reaches $1.00/share
With 83(b): Tax now = ($0.01 β $0.001) Γ 1M Γ 32% = $2,880 | Future gains: LTCG
Without 83(b): Tax at vesting = ($1.00 β $0.001) Γ 1M Γ 32% = $319,680
83(b) saves $316,800 if stock reaches $1.00/share
Extended
83(b) Break-Even Analysis
At what stock price does filing an 83(b) break even? Savings curve at different exit valuations
At what share price does the 83(b) break even? Tax savings vs risk at different exit prices.
| Exit FMV / Share | Tax with 83(b) | Tax without 83(b) | 83(b) Savings | Net After-Tax (83b) | Net After-Tax (no 83b) |
|---|
Without 83(b): all appreciation taxed as ordinary income at vesting. With 83(b): appreciation after grant FMV taxed as LTCG (20% assumed). Single filer at your other income level.
Frequently Asked Questions
What is a Section 83(b) election and who should file it?
A Section 83(b) election is a notice filed with the IRS within 30 days of receiving restricted stock or unvested equity, allowing you to pay income tax NOW on the current (usually low) value instead of when the stock vests (potentially at much higher value). It's most beneficial for startup founders and early employees receiving restricted stock agreements (RSAs) or early-exercised stock options when the FMV is near $0. You must file within 30 days β there are no extensions.
How much tax do I pay with an 83(b) election?
With an 83(b), you pay ordinary income tax on the "spread" β the fair market value of shares at grant minus what you paid (exercise price). For restricted stock agreements (RSAs) where founders pay $0.001/share, the spread on a company worth very little at founding is tiny, often resulting in $0 to a few hundred dollars of tax. The key benefit: all future appreciation is taxed as long-term capital gains (if held >1 year from grant date).
What happens if I don't file an 83(b) election?
Without an 83(b), you pay ordinary income tax each time shares vest based on the FMV at vesting minus your exercise price. If your company's value grows 10x during the vesting period, you pay ordinary income tax on all that appreciation. Additionally, your long-term capital gains holding period doesn't start until each tranche vests (not at grant), so timing is critical for LTCG treatment.
What is the risk of filing an 83(b) election?
The main risk is paying taxes on income that never materializes. If the company fails or you leave before vesting, your shares may be worth nothing or be forfeited β but you already paid taxes based on the grant FMV. You generally cannot get those taxes back. For very early-stage startups where FMV is near $0, this risk is minimal. At higher grant FMVs, the risk increases. Always assess the company's prospects before filing.
Does an 83(b) election apply to stock options (ISOs and NSOs)?
An 83(b) election applies to restricted stock (RSAs) and early-exercised unvested stock options. For incentive stock options (ISOs) and non-qualified stock options (NSOs), you cannot file an 83(b) on unexercised options β you exercise first, then potentially file 83(b) on the exercised (but still unvested) shares. Early exercise + 83(b) is a common strategy to lock in low FMV before vesting.