What is a Section 83(b) election?

A Section 83(b) election is a federal tax provision that allows employees receiving restricted stock or other equity compensation to elect to pay ordinary income taxes on the fair market value of the stock at the time of transfer, rather than when the restrictions lapse. This election must be made within 30 days of the property transfer and is irrevocable. The primary benefit is converting future stock appreciation from ordinary income to capital gains treatment, which can be enhanced through strategic Tax loss harvesting planning. The election works best when stock values are low at transfer and significant appreciation is expected. Typical applications include startup employees receiving restricted stock awards and executives developing comprehensive tax strategies for Individuals with equity compensation packages. As of 2025, the IRS has introduced Form 15620 as the standardized method for filing Section 83(b) elections, replacing prior informal letter formats. Taxpayers may now file electronically via the IRS website, receiving immediate confirmation and secure recordkeeping benefits. The election is available to employees, directors, advisors, and independent contractors receiving nonvested property—including restricted stock and early-exercised nonqualified stock options. For non-U.S. residents, additional disclosures and treaty considerations may apply, and eligibility may be limited depending on sourcing rules and local tax treatment.