83(b) Election Tax Calculator (2025)
Compare taxes with vs without filing an 83(b) election in 2025. Estimate ordinary income at grant or vest, basis, capital gains, and potential savings.
This simplified model does not account for AMT, QSBS, state taxes, holding period requirements, forfeiture risk, or timing nuances. Consult a tax professional.
Capital gains tax assumes long-term treatment; if sold before one year from the 83(b) election date, short-term rates may apply.
What is the 83(b) Election Calculator?
This calculator helps you compare the tax implications of filing versus not filing an 83(b) election for restricted stock awards (RSA) or early-exercised options. With an 83(b), ordinary income is recognized on the grant date and your basis becomes FMV at grant. Without it, ordinary income occurs at vest, and your basis becomes FMV at vest.
Use this tool to see total estimated tax across ordinary income and capital gains under both approaches. Then discuss with your CPA whether an 83(b) election makes sense for your situation.
How to Use This Calculator
- Enter equity details - Input shares, purchase price, FMV at grant and at vest.
- Add tax rates - Enter your marginal ordinary income rate and long-term capital gains rate.
- Model sale price - Adjust expected sale price to see capital gains under each scenario.
- Compare outcomes - Review total tax with vs without 83(b) and estimated savings.
Calculation Formula & Example
The Formula
With 83(b): Ordinary Tax = max(0,(FMV_grant − Price)×Shares)×OrdinaryRate; Basis = max(Price, FMV_grant)×Shares; Cap Gains = max(0,(Sale − Basis))×CapRate. Without 83(b): Ordinary Tax at Vest = max(0,(FMV_vest − Price)×Shares)×OrdinaryRate; Basis = max(Price, FMV_vest)×Shares; Cap Gains = max(0,(Sale − Basis))×CapRate.
Where:
- FMV_grant = Fair Market Value per share at grant
- FMV_vest = Fair Market Value per share at vesting
- Price = Purchase or strike price per share
- OrdinaryRate = Marginal ordinary income tax rate
- CapRate = Long-term capital gains tax rate
Example Calculation
Example (2025):
- Shares: 1,000; Price: $1; FMV at Grant: $1.50; FMV at Vest: $5; Sale Price: $5
- Ordinary Rate: 37%; Capital Gains Rate: 20%
With 83(b): Ordinary income = ($1.50−$1)×1000 = $500 ⇒ Tax now ≈ $185; Basis = $1.50×1000=$1,500; Cap gain at sale = $5,000−$1,500=$3,500 ⇒ Cap tax ≈ $700; Total ≈ $885.
Without 83(b): Ordinary income at vest = ($5−$1)×1000 = $4,000 ⇒ Tax ≈ $1,480; Basis = $5×1000=$5,000; Cap gain = $5,000−$5,000=$0; Total ≈ $1,480.
Estimated savings with 83(b): ~$595 in this scenario.
Benefits of Using This Calculator
- Plan your election - Quantify potential savings before the 30-day 83(b) deadline.
- Compare scenarios - Test different FMVs and sale prices to see tax trade-offs.
- Inform discussions - Share outputs with your CPA for tailored guidance.
Calculator Use Cases
When FMV at grant is low and appreciation is likely.
For restricted stock awards subject to vesting.
When you early exercise and receive restricted stock subject to vesting.
Frequently Asked Questions
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