How to make an 83(b) election for your company stock options

Updated September 12, 2025

What is an 83(b) election?  

An 83(b) election is an IRS filing that lets you (if your stock-option or RSU agreement permits) “early exercise” shares for tax purposes. By filing it within 30 days of early exercise, you start the tax‑counting clock immediately, giving you a chance to qualify for long‑term capital gains sooner.

At SeedSafe, we believe financial strategy should bring clarity and peace, not confusion. Think of an 83(b) election as a time machine for your tax life – iit can be empowering, but only if used with intention. This is for information purposes on the mechanics of making the election.

Can I make an 83(b) election?

Before making the election, it is important to understand whether your stock option agreement allows this. Your company, or the company attorney, should share an 83(b) election form (IRS Form 15620) with you, if you are eligible. You can also look at your stock option plan documents to see if it allows for “accelerated vesting” of your options or RSUs.

The election must be filed with the IRS within 30 days of the date you receive the shares (grant or exercise, depending on plan terms).  So don’t delay – you have a time limit!

What is accelerated vesting?

“Accelerated vesting” in your plan gives you the option to buy your equity now – rather than waiting years for it to vest. Filing the 83(b) election means you’ve taken constructive ownership today, which may, in certain circumstances, result in lower taxable income compared to waiting until vesting, depending on company growth and your tax situation.

Please review your stock option agreement and talk to your finance department to find out if you are eligible for this election.

What are the pros and cons of an 83(b) election?

Pros:

• Starts the long-term capital gains holding period at the time of the election rather than at vesting
  • Incentive Stock Options (ISOs): possibly smaller or no bargain‑element income for AMT purposes
  • Non‑Qualified Stock Options (NQSOs): potential reduced ordinary‑income recognition at exercise
  • Restricted Stock Units (RSUs): could, in some cases, reduce the amount of income recognized at grant.

Cons:

• Immediate cash outlay: you must pay for shares now
• Partial elections can jeopardize ISO status: given the $100,000 option‑value limit
• Company separation may require forfeiture: even if you already paid for the shares or paid taxes
• State tax differences: not all states honor federal 83(b) treatment the same way

How do I make the 83(b) election?

1. Understand the tax consequences:  Will you need to recognize any income on these shares?  fair-market value minus purchase price = gross income. You may owe taxes on this amount. This amount is something you may owe taxes on, depending on the situation. 
2. Pay for your company shares:  Early exercise demonstrates ownership and reduces IRS risk of forfeiture.
3. Complete the IRS Form 15620 (the Section 83(b) Election Form) within 30 days of receipt of the shares:  Your company should give instructions, but you’re responsible for filing on time.
4. Include a copy of the form to be stamped and returned to you for proof of filing.  
5. Mail the forms to your IRS office you would send a personal tax return to.
6. Take the package to the U.S. Post Office and attach a Certified Return Receipt (example here). This receipt will serve as proof of the post-stamp date in case the IRS claims you did not send it within the 30 day period. 
7. Keep good records, just in case:  You most likely won’t be selling the shares for a few years, so good record keeping can make all the difference!
   1. Original signed 83(b) Election Form (IRS Form 15620)
   2. Original Certified Return Receipt
   3. Copy of Cover Letter
   4. Copy of Check for Shares
   5. Stamped IRS returned copy of signed 83(b) Election Form (once you receive it in the mail)

In Summary

• What: 83(b) lets you accelerate the capital-gains timeline on equity
• Why: To change the timing of taxable income, which may in some cases result in different tax outcomes.
• When: File within 30 days of grant date
• How: Pay for shares, file Form 83(b), send certified mail, keep every piece of proof

Who Benefits From This Post?

We wrote this for growth‑minded tech professionals and value-driven families at life transitions—like early founders, creators of enduring legacies, and people who care about aligning money with meaning. This isn’t just about tax efficiency; it’s about creating spaciousness and choice, rooted in financial clarity.

If you’d like help thinking through whether an 83(b) election is right for your situation – or want a gentle, judgment‑free review through the emotional texture of this decision – we’re here to help you steward both your heart and your financial life with wisdom and trust.

This post is for informational purposes on the mechanics of the election. Discuss whether making the 83(b) election makes sense for you with your accountant or financial advisor.

Where are you in your start-up adventure?

• • Looking for more information on how to negotiate your next compensation package?

• • Evaluating your current company offers?

• • Or are you exercising stock options?

This material is for informational and educational purposes only and should not be considered tax, legal, or investment advice. Please consult your own qualified professionals before making financial decisions, including whether to file an 83(b) election. Links to third-party websites, including IRS.gov, are provided solely for convenience and informational purposes; we do not control, endorse, or assume responsibility for their content.

If you live in a state with it’s own form of state AMT, this further complicates the matter. AMT calculations can be difficult and you may need professional help, such as that of an accountant, tax attorney, or someone experienced in complex tax returns.