83(b) Election Tax Prepayment Calculator

Weigh the tax trade-off of making an 83(b) election on restricted stock or early exercised options. Provide the share count and current fair market value to compare the ordinary tax you prepay today with the tax owed at vesting. Optional fields capture strike price, projected exit value, and marginal tax rates so you can quantify the cash required now, future capital gains exposure, and net savings.

Total restricted shares or early exercised options covered by the election.
409A or board-approved fair market value used to price the grant today.
Optional — defaults to $0.00. Enter your exercise price if options were exercised early.
Optional — defaults to three times the current fair market value. Adjust to your expected sale price.
Optional — defaults to 37.00%. Combine federal, payroll, and local ordinary income tax rates as needed.
Optional — defaults to 5.00%. Set to zero if you have no additional state or city income tax exposure.
Optional — defaults to 20.00%. Include federal and state long-term capital gains rates if applicable.

Illustrative planning tool only. Work with your tax advisor before filing an 83(b) election to confirm timing, rate assumptions, and liquidity needs.

Examples

  • Example 1 — 25,000 shares, $1.50 FMV, $0.10 strike, $12.00 future value, 37% ordinary + 5% state, 20% capital ⇒ Tax paid now with 83(b): $14,700.00 USD • Capital gains tax later (83(b)): $52,500.00 USD • Total tax with election: $67,200.00 USD • Tax if you skip the election: $124,950.00 USD • Net savings from filing: $57,750.00 USD • Ordinary rate applied: 42.00% • Capital gains rate: 20.00% • 83(b) stays advantageous for any future value above $1.50 per share.
  • Example 2 — 12,000 shares, $3.80 FMV, $2.50 strike, $6.50 future value, 35% ordinary, 15% capital ⇒ Tax paid now with 83(b): $5,460.00 USD • Capital gains tax later (83(b)): $4,860.00 USD • Total tax with election: $10,320.00 USD • Tax if you skip the election: $16,800.00 USD • Net savings from filing: $6,480.00 USD • Ordinary rate applied: 35.00% • Capital gains rate: 15.00% • 83(b) stays advantageous for any future value above $3.80 per share.

FAQ

What happens if I forfeit unvested shares after filing?

You cannot recover taxes already paid with an 83(b) election unless you filed for a refund within the statute of limitations. The calculator helps quantify that downside by showing the upfront cash requirement.

Does this include employer payroll tax?

No. The calculation focuses on the employee’s income tax. Employers should separately model their payroll tax expense for restricted stock vesting events.

How do QSBS exclusions affect the result?

If the stock later qualifies for Section 1202 QSBS exclusion, you can set the capital gains rate to 0% to reflect the potential federal tax benefit.

Can I model multiple tranches?

Run the calculator for each grant or option lot and sum the results. Different strike prices or vesting timelines may warrant different elections.

Additional Information

  • The calculator assumes you hold the stock for at least one year post-vesting so that appreciation after the 83(b) election qualifies for long-term capital gains.
  • If the stock falls below the strike price, the election produces no current tax. Losses may be limited if the company fails, so keep liquidity contingencies in mind.
  • Ordinary tax rates include federal, state, local, payroll, and Net Investment Income Tax exposure as appropriate.
  • Setting the projected value equal to today’s value shows the maximum tax you could prepay without expecting appreciation.

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