What Is an 83(b) Election? The 30-Day Deadline Explained
Startup founders and employees with restricted stock or early-exercised options have one 30-day window to choose when they are taxed. What the election does, how to file and what happens if you miss it.
An 83(b) election lets you pay income tax on restricted stock when you receive it, at its value then, instead of when it vests. You must file it with the IRS no later than 30 days after the stock is transferred to you, on Form 15620 or a signed statement. The transfer date in your agreement starts the clock.
The rule is section 83(b) of the Internal Revenue Code, and the filing instructions are in IRS Publication 525, current as of November 2026. Whether to make the election depends on your circumstances; a tax professional can run the numbers.
What does an 83(b) election do?
Without the election, restricted stock that can be forfeited (for example, if you leave before vesting) is taxed as ordinary income when it vests, at its value on each vesting date. With the election, you include the value at the time of transfer, minus anything you paid, in income for that year. Later growth is not taxed as compensation when the shares vest, and your basis is what you paid plus the amount you included in income.
| No 83(b) election | With 83(b) election | |
|---|---|---|
| When income is taxed | At each vesting date | In the year of transfer |
| Amount taxed as compensation | Value at vesting minus price paid | Value at transfer minus price paid |
| Capital gain holding period starts | When shares vest | When shares are transferred |
| If you leave and forfeit unvested shares | No income on forfeited shares | Loss limited to what you paid minus anything you got back; tax already paid is not refunded |
| Can it be undone? | Not applicable | Only with IRS consent, given only for a mistake of fact |
The election is most common when the value at transfer is low and the price paid equals that value, so the income to report is zero or close to it. Founders buying shares at a nominal price when a company is formed are the classic case.
Who files an 83(b) election?
- Founders who receive shares subject to vesting or a company repurchase right.
- Employees who receive restricted stock awards, typically at an early-stage startup. (This is different from RSUs, which are a promise to deliver shares later; an 83(b) election is not available for RSUs.)
- Employees who early-exercise stock options, where the plan lets you buy shares before they vest. The election applies to the restricted shares you receive on exercise, not to the option itself; Publication 525 notes that you cannot make the election for a statutory or nonstatutory option.
Our guide to ISO vs NSO stock options explains how option exercises are taxed when no election is involved.
How do you file an 83(b) election?
The IRS created Form 15620 (current revision April 2025) for this election, but a written statement with the same information is also accepted.
- Complete the form or statement. It must include your name, address and taxpayer ID; a description of the property; the transfer date and tax year; the restrictions; the fair market value at transfer; the amount you paid; and a statement that copies were provided to the appropriate persons.
- Sign it and state that you are making the election under section 83(b).
- Mail it to the IRS service center where you file your return. Publication 525 points to the address in the Form 1040 instructions for returns that request a refund or do not enclose a payment.
- Send it so it is filed within 30 days of the transfer date. Certified mail with a dated receipt gives you proof of timely mailing.
- Give a copy to the company you work for, and to the transferee if someone else received the shares.
- Keep a copy with your proof of mailing for as long as you own the shares.
The 30 days are calendar days. Weekends count, and the clock starts on the transfer date, not on the date you sign paperwork later or receive a stock certificate.
What happens if you miss the 30-day deadline?
The election is not available, and there is no general late-filing relief for it. The default rule applies: you are taxed as the shares vest, on their value at each vesting date. If the company’s value rises quickly, that can mean a much larger ordinary income amount spread over the vesting years, with tax due even though the shares may not be sellable.
Some companies can restructure a grant, for example by canceling it and issuing a new one, which starts a new 30-day window. Whether that is possible, and its tax effect, is a question for the company’s counsel and your tax advisor.
Bottom line
Ask the company’s finance or legal team for the board-approved fair market value per share on your transfer date before you fill in the form; that figure goes in the value box, and it is usually far below the price per share in a funding-round headline. If you are joining a startup after a priced round, our explainer on pre-money and post-money valuation shows why those numbers differ.
FAQ
Can I file an 83(b) election for RSUs?
No. RSUs are not property transferred to you until they settle, so section 83(b) does not apply. RSUs are taxed as wages when shares are delivered.
Do I need to attach the 83(b) election to my tax return?
The election is filed with the IRS service center within 30 days of the transfer, separately from your annual return. Keep a copy with your tax records, and report any income from it on that year’s return.
What if I paid full fair market value for the shares?
Then the amount to include in income is zero, because value minus price paid is zero. The election still matters, since it starts your capital gain holding period at transfer and avoids tax at vesting.
