Equity Compensation · 12 min read

The 83(b) Election: The 30-Day Deadline and When to File

The Financial Sciences Company Published Sep 26, 2026

The short answer

A Section 83(b) election tells the IRS to tax restricted stock, or shares from an option you exercised before it vested, at their value on the day you receive them instead of on each vesting date. It must be filed within 30 days of the transfer, and there are no extensions. When the shares are worth little at transfer, the election usually costs little now and turns later growth into capital gain; when they are already valuable or likely to be forfeited, it can be an expensive, irrevocable mistake.

Few tax elections carry a deadline this short or a penalty for missing it this permanent. An 83(b) election changes when restricted stock, or stock from an option exercised before it vested, is taxed. The window is 30 days from the day the shares are transferred to you, and the IRS cannot extend it. Below: what the election does, how to file it, a checklist, and the cases where filing is the wrong move. Figures are 2026 federal figures; confirm your own facts with a CPA or tax counsel before the 30 days run.

What does an 83(b) election do?

It moves the taxable event from the vesting dates to the transfer date. By default, stock you receive for services that can still be forfeited is taxed when it vests, on the value that day minus whatever you paid (26 U.S.C. §83(a)). Each vesting date becomes a slice of ordinary income measured at whatever the shares are worth by then.

An election under Section 83(b) says: tax me now instead. You include in income, for the year of transfer, the excess of the fair market value at transfer over the amount you paid (26 U.S.C. §83(b)(1)). If you paid full value, as founders and early exercisers usually do, that excess is zero and the election reports no income. From then on, growth is capital gain rather than wages, and your holding period starts at the transfer rather than at each vest (26 U.S.C. §83(f)).

Three boundaries matter:

RSUs do not qualify. An RSU is a promise to deliver shares later, and the regulations exclude “an unfunded and unsecured promise to pay money or property in the future” from the definition of property (26 CFR §1.83-3(e)). Nothing has been transferred, so there is nothing to elect on.
Options qualify only once exercised. Granting an option is not a transfer of property; exercising it is (26 CFR §1.83-3(a)). An early-exercise provision lets you exercise before vesting and take unvested shares, and that exercise starts the 30 days.
For incentive stock options, the election counts only for the alternative minimum tax. Section 83 does not govern the regular tax on an ISO exercise, so the election is not effective for ordinary income tax, “although such an election is permissible for alternative minimum tax purposes” (26 CFR §1.422-1(b)(3), Example 2). Early exercising an ISO while the spread is near zero, then electing, can fix the AMT adjustment at a small number.

When is the 83(b) deadline?

Thirty days after the date of transfer, with no extension. The statute requires the election “not later than 30 days after the date of such transfer,” and the regulations repeat it (26 U.S.C. §83(b)(2); 26 CFR §1.83-2(b)). The IRS has no discretion to accept a late election.

The clock starts on the day you acquire beneficial ownership: the grant date for restricted stock, the exercise date for early-exercised options, not the date of the board resolution or the day paperwork arrives (26 CFR §1.83-3(a)). And the election is effectively permanent. It “may not be revoked except with the consent of the Commissioner,” consent is limited to a mistake of fact requested within 60 days of discovering it, and a decline in the value of the property is not a mistake of fact (26 CFR §1.83-2(f)).

Two rules help. If day 30 lands on a Saturday, Sunday, or legal holiday, the IRS form instructions confirm the election is timely if postmarked by the next business day (IRS Form 15620 instructions, When to File). And under the timely-mailing rule, an election deposited in U.S. mail is treated as filed on the postmark date; registered mail, and certified mail under IRS rules, is prima facie evidence of delivery, and designated private delivery services get the same treatment (26 U.S.C. §7502).

How do you file an 83(b) election?

Use IRS Form 15620 or a written statement, get it to the IRS within the 30 days, and give the company a copy. Form 15620, Section 83(b) Election (Rev. April 2025), is the IRS’s own form; a signed statement that meets the regulations works as well (IRS Form 15620 (Rev. 4-2025)). Either must show your name, address, and taxpayer identification number; a description of the property; the transfer date and taxable year; the restrictions; the fair market value at transfer; the amount paid; and a statement that copies were furnished to the company (26 CFR §1.83-2(e)).

Online. The IRS now lists Form 15620 among its mobile-friendly forms. An IRS Online Account is required for forms that need a signature, and after completing the form you “will have the option to submit it online or download a copy for mailing” (IRS, Mobile-friendly forms). After submitting, save the confirmation and a copy of the completed form for the company. The online form sits behind the account sign-in, so check irs.gov for the current process before relying on it.
By mail. File the signed form “with the Internal Revenue Service Center where you file your return” (IRS, update to Publication 525 for the Section 83(b) election), by certified mail with return receipt or a designated private delivery service, so the postmark date is documented.

Then furnish a copy to the person for whom the services are performed and, if the shares came from someone else, to that transferee (26 CFR §1.83-2(d)). The company needs it to report any income on your Form W-2 or 1099 and to track basis. Use one filing method only, so the IRS does not receive duplicate elections.

Filing checklist

Write down the transfer date (grant for restricted stock; exercise for early-exercised options) and count 30 calendar days forward. Put that date on a calendar today.
Get the fair market value at transfer and the amount you paid, in writing from the company. For a private company the board’s latest valuation is the usual reference.
Complete Form 15620, or a statement with all seven required items, and sign it.
Submit online through your IRS Online Account, or mail it certified with return receipt to the service center where you file. One method.
Keep proof: the online confirmation, or the certified-mail receipt and return-receipt card, with a copy of the election.
Give the company a signed copy, and keep evidence that you did.
Tell your tax preparer, so the return for the year matches the election, and, for an ISO, so the AMT treatment is handled.

When should you not file an 83(b) election?

When the tax you would pay now is large, or the chance of forfeiting the shares is real, or both. The election is a bet that the shares will vest and be worth more later. It pays off when the value at transfer is low. It can be expensive in three situations:

The shares may be forfeited. If you leave before vesting and the company takes the unvested shares back, the income you reported stays reported. The statute is explicit: if the property is forfeited, “no deduction shall be allowed in respect of such forfeiture” (26 U.S.C. §83(b)(1)). The forfeiture is treated as a sale on which your loss is limited to what you paid over what you get back, so cash paid for the shares can produce a capital loss, but the tax paid on the spread is gone (26 CFR §1.83-2(a)).
The value at transfer is already high. A restricted stock grant at a late-stage company can carry a six- or seven-figure spread. Electing means paying ordinary income tax on that spread this year, out of pocket, on shares you cannot yet sell. The default rule at least lets the tax arrive as shares vest and, at a public company, be paid by selling some of them.
The value could fall. Because the election cannot be revoked for a drop in value, income reported at a high valuation is not refunded if the shares are worth less at vest or at sale. You are left with a capital loss, deductible against capital gains and then only $3,000 a year against ordinary income.

The opposite case is the common one for founders and early employees who exercise early: you paid full value, the spread is zero, and the election reports no income. There the election has little downside beyond paperwork, and skipping it means every future vest is taxed as wages at whatever the shares are worth by then.

How does the 83(b) election connect to QSBS?

By starting the clock. The holding period for restricted stock begins when it vests unless an 83(b) election is made, in which case it begins at the transfer (26 U.S.C. §83(f)). Section 1202’s exclusion for qualified small business stock depends on holding the stock three to five years, depending on when it was issued (26 U.S.C. §1202(a)), so an election can move the start of that period years earlier. The QSBS tests themselves, and California’s refusal to follow the exclusion, are covered in a separate article.

An illustrative example: founder stock with and without the election

The founder below is hypothetical, and the values are round numbers chosen to show the mechanics, not a forecast for any company. A married founder filing jointly receives 1,000,000 shares of restricted common stock worth $0.01 per share and pays $0.01 per share, or $10,000. The shares vest 25% a year over four years and are worth $1, $3, $6, and $10 on the four vesting dates. The founder sells all of them in year six for $12 per share. The household is in the 37% bracket every year, and its taxable income exceeds the $613,700 threshold at which the 20% capital gains rate begins, so the 20% rate and the 3.8% net investment income tax apply to the sale (Rev. Proc. 2025-32, section 4.03).

Hypothetical founder, married filing jointly, 2026 federal figures (Rev. Proc. 2025-32; 26 U.S.C. §1411). Illustrative only. State tax, payroll tax, and the lower brackets are ignored; the QSBS exclusion is not applied.
Step	With the 83(b) election	Without the election
Income at grant: (value minus amount paid) × 1,000,000 shares	$0	$0
Ordinary income at the four vests: 250,000 shares × $1, $3, $6, $10, less the $0.01 paid	$0	$4,990,000
Federal tax on the vests at 37%, due in years one through four	$0	$1,846,300
Basis at sale	$10,000	$5,000,000
Long-term capital gain on the sale of 1,000,000 shares at $12	$11,990,000	$7,000,000
Federal tax on the sale at 20% plus 3.8%	$2,853,620	$1,666,000
Total federal tax	$2,853,620	$3,512,300

The difference is about $660,000, but the timing may matter more. Without the election, $1,846,300 of tax comes due across four years in which the founder holds private shares that may not be sellable. With the election, the tax arrives in the year of sale, out of sale proceeds. If the stock were qualified small business stock, the election would also mean the whole position had been held more than five years at the sale; without it, the last tranche would have been held for two.

Now change one assumption. Suppose the founder leaves after year one and forfeits 750,000 unvested shares. With the election, no income was reported, so the loss is $7,500 of cost, claimable as a capital loss. Had the grant instead carried a $2 spread at transfer, the election would have reported $2,000,000 of income and $740,000 of tax on shares later forfeited, with no deduction. That is the case the election was not built for.

How we approach the election

We treat the 30-day window as the first planning deadline of an equity position. The decision starts with three numbers: the spread at transfer, the tax it produces this year, and the probability the shares vest. When the spread is zero, the work is mostly documentation. When it is large, the question is whether the household can pay the tax from other assets and would still make the bet knowing it cannot be undone. That analysis sits inside our work on equity compensation and concentrated stock and our planning for executives and employees with equity pay. We coordinate the filing with the household’s CPA, keep the proof with the grant documents, and carry the holding-period and QSBS questions into the household’s tax planning. What follows a sale is covered in planning after a large gain.

Questions worth answering before the 30 days run

What is the transfer date, and what is the last day the election can be postmarked or submitted?
What is the fair market value at transfer, who determined it, and what did I pay?
If the spread is more than zero, what is the tax this year, and can I pay it without selling anything?
How likely is it that I forfeit the shares, and how would I feel about the tax if I did?
Are these restricted shares, early-exercised NSOs, early-exercised ISOs, or RSUs? Only the first three can elect.
Does the company’s stock plausibly qualify as small business stock, so the holding-period start matters?

What this does not mean

Filing an election is not a statement that the shares will be worth more, and nothing here suggests that any company’s stock will rise or that an election is right for a particular grant; the same arithmetic run with a falling share price favors not electing. It is not tax advice for your return either. The value at transfer, the year the election is reported, state tax, payroll tax, and the AMT treatment of an ISO exercise depend on facts that belong with a CPA or tax counsel. What this article can do is make the deadline and the trade-off clear enough that the conversation happens before day 30.

Frequently asked questions

How long do I have to file an 83(b) election?

Thirty days after the date the property was transferred to you. The statute and the regulations both set the 30-day limit, and the IRS has no authority to extend it. If day 30 falls on a weekend or legal holiday, a filing postmarked the next business day is timely.

Can I file an 83(b) election online?

Yes. The IRS lists Form 15620 among its mobile-friendly forms. An IRS Online Account is required, and once the form is completed you can submit it online or download a copy to mail. Use one method only, keep the confirmation, and give the company a copy.

What happens if I miss the 83(b) deadline?

The default rule applies: each vesting date is a taxable event, with the value at vest minus what you paid taxed as ordinary income. There is no late-filing relief. A new transfer, such as a fresh grant or a later early exercise, starts a new 30-day window for those shares only.

Can I make an 83(b) election on RSUs?

No. An RSU is an unfunded promise to deliver shares in the future, and the regulations exclude that kind of promise from the definition of property. Until shares are issued there is no transfer to elect on. Restricted stock and early-exercised options are what the election covers.

Do I get the tax back if I forfeit the shares?

No. If you elected and later forfeit the shares, the law allows no deduction for the forfeiture. Cash you paid for the shares, minus what you receive back, can be claimed as a capital loss, but the tax paid on the spread at transfer is not refunded.

Does an 83(b) election work for incentive stock options?

Only for the alternative minimum tax. Regular tax on an ISO exercise is governed by Section 421 rather than Section 83, so the election has no effect on ordinary income; the regulations state it is permissible for AMT purposes. Early exercising an ISO with little or no spread and filing the election can limit the AMT adjustment.

Sources and further reading

Next steps

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The views and opinions expressed here are those of The Financial Sciences Company as of the publish date and are provided for informational and educational purposes only. They are not personalized investment, tax, or legal advice. The Financial Sciences Company, LLC is a registered investment adviser. Registration does not imply a certain level of skill or training. Additional information is available in our Form ADV at adviserinfo.sec.gov.

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