83(b) Election (2026)

Pay tax now or pay tax later—possibly much more

Restricted stock grants can be taxed at vest when restrictions lapse, converting appreciation into ordinary W-2 income. An 83(b) election accelerates a smaller ordinary income inclusion to grant date fair market value, shifting later growth to capital gain treatment if shares vest and are sold. The trade: pay tax upfront on value that may never vest if you leave the company.

This calculator compares two paths with numbers you enter: grant FMV, expected vest FMV, shares, forfeiture risk assumptions, and sale price. It shows ordinary income timing, estimated 2026 tax at grant vs vest, and capital gain on sale under each path.

2026 ordinary and capital rates

Ordinary income at grant or vest stacks through 2026 brackets after deductions (Rev. Proc. 2025-32). Capital gain on post-election appreciation uses long-term rates when sale is more than one year after grant (and holding tests met). Short-term sale after grant without meeting long-term tests taxes appreciation as ordinary.

How to use the calculator

Step 1 — Enter grant economics

Shares, grant-date FMV (often small for early-stage grants), and expected vest-date FMV if you skip 83(b).

Step 2 — Choose election path

Compare tax due at grant with 83(b) vs tax at vest without election, including payroll tax on vest wages.

Step 3 — Model sale

Enter exit price and timing. 83(b) path basis includes grant income; no-election path basis includes vest income.

Worked example

10,000 shares, $0.10 grant FMV, expected $5 vest FMV, sale at $8 after 18 months. Without 83(b): ~$50,000 ordinary at vest plus long-term gain on $3 per share if sold after one year from vest. With 83(b): ~$1,000 ordinary at grant, capital gain on $7.90 per share if long-term rules met—massive ordinary income avoided at vest if shares vest. If you leave before vest, 83(b) tax is sunk cost.

Cash to pay tax at grant

Early grants may have low FMV but still require cash for tax and potential AMT if structure triggers preferences. Pair with the AMT calculator when grant involves ISO-like structures or unusual preferences.

Payroll tax difference

Vest without 83(b) is W-2 wages with FICA on vest FMV up to Social Security wage base ($184,500 in 2026). 83(b) income at grant may not be subject to FICA in the same way—facts depend on employment vs founder status; confirm with preparer.

Documentation

File election with IRS within 30 days, keep proof of mailing, give copy to employer. Missing the deadline removes the 83(b) option for that grant permanently.

RSU distinction

RSUs are not eligible for 83(b) in typical plans because no stock transfers at grant. Compare RSU outcomes in the RSU tax calculator instead.

Common mistakes

• Missing the 30-day filing window
• Electing without cash for tax on illiquid stock
• Ignoring forfeiture if employment ends early
• Confusing restricted stock with RSUs
• Assuming state follows federal 83(b) timing in all cases

Related tools

Option exercises: stock options calculator. QSBS after long hold: QSBS calculator (manual eligibility). Withholding: W-4 withholding calculator.

Founder and early employee scenarios

Founders paying nominal par value for restricted stock often file 83(b) within 30 days to tax pennies of income while company value is low—future unicorn appreciation becomes capital gain instead of ordinary at vest. Risk remains total loss of tax paid if company fails before vest. Venture-backed grants with single-trigger acceleration on change of control can vest large blocks suddenly—83(b) already filed locks in lower basis.

Unfiled 83(b) on valuable early grants is a common startup regret—calendar the deadline in the same week as grant acceptance, not at tax season next year.

AMT and illiquid stock interplay

Early-stage 83(b) on stock with low FMV may still trigger AMT if parallel ISO grants exist same year—coordinate equity grant calendar. Private company liquidity events (tender offers) before full vest may let you sell some shares to cover tax from 83(b) without waiting IPO.

Spousal consent and community property states affect who files 83(b) when shares granted to employee spouse—both may need copies for community property documentation.

Stock splits and recapitalizations after 83(b) adjust share count but generally preserve election if corporation continuity maintained—confirm with corporate counsel on recap.

Reading your results for 83b election

The interactive panel above shows a transparent calculation trace in cents—use it to sanity-check inputs before you rely on any number for decisions. Tax software at filing time may differ when every credit, limitation, and state conformity rule is applied in full. Treat output here as structured planning math aligned to 2026 federal reference data where noted, not as e-file output or professional advice.

When your situation includes items this specialized tool simplifies—multiple entities, prior-year carryforwards, treaty elections, or state nonconformity—layer those facts manually or with a preparer. The goal is to narrow uncertainty enough to ask better questions, not to eliminate the need for review when dollars are material.

Recordkeeping that survives scrutiny

Keep source documents (forms, statements, logs, confirmations) that support every input you typed. IRS and state audits often start from third-party reporting; your job is to reconcile 1099s, K-1s, and broker exports to the story you file. Digital backups with dates beat reconstructed spreadsheets created after an notice arrives.

For 83b election, retain worksheets year to year when carryforwards exist—loss carryovers, credit carryforwards, passive loss suspensions, and basis schedules die silently if you change preparers and lose history.

Related tools on this site

Options: stock options calculator. RSUs: RSU tax calculator. QSBS hold: QSBS calculator.

2026 federal brackets and payroll context

Ordinary income tax brackets and standard deductions for 2026 follow IRS Rev. Proc. 2025-32 ($16,100 single / $32,200 joint standard deduction; seven marginal rates from 10% to 37%). Social Security tax applies at 6.2% on wages up to the $184,500 wage base; Medicare continues at 1.45% with Additional Medicare Tax above threshold wages. These layers stack independently from specialized rules modeled in this 83b election tool—run the federal income tax calculator when you need the full return picture.

Quarterly estimated tax may be required when withholding does not cover liability—see the quarterly estimated tax calculator. Year-end refund or balance due comparisons belong in the tax refund estimator once withholding and payments are known.

Sources and methodology

Brackets from Rev. Proc. 2025-32. 83(b) rules under IRC Section 83; employment tax treatment varies by facts. Educational—not legal advice on filing elections.