What is an 83(b) election?

An 83(b) election tells the IRS you want to be taxed on restricted stock or early-exercised options now, on today’s usually small spread, rather than later as the shares vest at a potentially much higher value. It can convert future appreciation from ordinary income into capital gains and start your long-term holding clock.

What is the 83(b) deadline?

You must file the election with the IRS within 30 days of the grant or early exercise. It is a hard deadline with essentially no exceptions — miss it and you cannot make the election. File by certified mail and keep proof.

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Should you file an 83(b) election?

Q: When does filing an 83(b) make sense?

It is most attractive when the current spread is small or zero, so the tax now is minimal, and you expect the shares to rise. If the spread is already large, filing means a real tax bill now on paper value you cannot yet sell — and if the company fails, that tax is generally not recoverable. Weigh it with a tax adviser.

If you hold restricted stock or early-exercised options, an 83(b) election lets you pay tax now — on today’s usually small spread — instead of later, as the shares vest at a potentially much higher value. Done right, it converts future growth from ordinary income into capital gains. See what it could save — and the hard 30-day deadline.

Written & maintained by the PrivateTechShares team · Published October 2026 · Reviewed October 2026

⏰ A hard deadline: an 83(b) election must reach the IRS within 30 days of your grant or early exercise. There is essentially no way to fix a missed deadline. If you’re inside that window, don’t sit on it — confirm with a tax adviser and file by certified mail.

Shares (restricted or early-exercised) — number of shares

Price you paid per share ($) — strike / purchase price

Value per share now ($) — 409A / FMV at grant or exercise

Expected value per share when fully vested ($) — your estimate

Your ordinary income tax rate (%) — top marginal, rough

Long-term capital gains rate (%)

Potential tax saved by filing 83(b)

$—

by converting future growth from income to capital gains

Tax to pay now if you file (on today’s spread)$—

Ordinary income tax at vesting if you don’t file$—

That growth taxed as capital gains instead$—

Potential saving$—

What this means. —

A simplified, directional estimate for orientation only — not tax or legal advice. It compares paying ordinary tax on today’s spread (plus capital gains on later growth) against paying ordinary tax on the full spread at vesting, assuming a sale at the vested value. It ignores AMT, state tax, the exact timing of gains, and your full return. 83(b) is a genuinely consequential, time-limited decision — confirm it with a qualified US tax adviser before filing.

What to do next

Inside the 30 days?

Don’t let the clock run out while you decide. Confirm the numbers with a tax adviser quickly, and if you file, send it by certified mail and keep the receipt.

Weigh the downside

Filing means paying tax now on paper value. If the shares never vest or the company fails, that tax is generally gone. The bet is cleanest when the spread today is tiny.

Planning a whole exercise?

83(b) is one step. Exercising, the AMT, clearing ROFR and selling are the rest — the toolkit is the step-by-step.

See the preparation toolkit →

Free: the Equity Starter Kit

Plain-English guides to the equity you hold — including the 83(b) question, exercise deadlines and the tax to plan for. Instant download, no email required.

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Questions people ask

What exactly is an 83(b) election?

It’s a short letter to the IRS saying you want to be taxed on restricted stock or early-exercised options now, on today’s spread, rather than as it vests. When the spread today is small or zero, the tax now is tiny — and future appreciation becomes a capital gain instead of ordinary income, with the long-term clock already running.

What’s the deadline, really?

30 days from the grant or early exercise, filed with the IRS. It’s effectively unforgivable if missed. File by certified mail, keep proof, and include a copy with your tax return.

When is it a bad idea?

When today’s spread is already large, filing means a real tax bill now on value you can’t yet sell — and if the shares never vest or the company fails, that tax generally can’t be recovered. The election is cleanest when the current value equals (or nearly equals) what you paid.

General information only — not financial, tax or legal advice. PrivateTechShares is an education and tools service: it is not a broker or marketplace, does not introduce buyers and sellers, does not hold funds, and does not execute or advise on transactions. Confirm your own situation with a qualified US tax adviser before making an 83(b) election.