83(b) Elections 2025: What You Need to Know (and What’s New)
If you’re a founder, early employee, or creative entrepreneur getting equity in a startup or project, Section 83(b) elections are a tax move you can’t ignore. In 2025, we’ve got some updates that make the process cleaner — but also demand sharper attention.
What an 83(b) Election Is — The Basics
Normally, when you receive restricted stock (stock subject to vesting or forfeiture), the tax code says you recognize income when the stock vests (or your rights become non-forfeitable). That means paying ordinary income tax on the difference between the stock’s fair market value (FMV) at vesting and what you paid (if anything).
An 83(b) election lets you accelerate that tax event: you choose instead to pay tax immediately (in the year of grant) on the FMV at grant—typically very low—so that future appreciation is taxed later as capital gains.
If your stock is essentially worthless or nominal in value at the time of grant, 83(b) can save you a lot in ordinary income taxes down the line.
But it’s not risk-free: if you forfeit the shares later, you’ve already paid tax on something you never fully own.
Also—if stock is undervalued or there's ambiguity about valuation, auditing risk rises.
2025 Updates & Important Changes
Several meaningful changes have been made in 2024–2025 that affect how 83(b) elections are done:
IRS Form 15620 is now the standard form
The IRS released Form 15620 in 2024 to standardize 83(b) elections, replacing the prior practice of sending a custom letter under Rev. Proc. 2012-29 or equivalent.Electronic filing is now available
As of mid-2025, the IRS now permits online submission of Form 15620 via its “mobile-friendly forms” portal.You still must satisfy the 30-day deadline from the date of the stock transfer.
You must provide a copy to the company (employer or issuer), just as before.
The online filing gives immediate confirmation and audit trail benefits.
No changes to the 30-day deadline or core rules (so far)
While the process is more modern, the deadline and fundamental rules remain unchanged. If you miss the 30-day window, the election is not valid.Clarified roles and inclusions
The new Form 15620 instructions clarify who may file (the person performing the services) and require statements about various aspects like fair market value, description of property, and restrictions.
What Doesn’t Change (But Still Matters)
Once made, an 83(b) election is generally irrevocable.
The election must cover all interest in the property subject to vesting (not just a portion).
The election should be filed in the same tax year the stock is granted.
You may still choose to mail the form, but now the electronic route is easier and preferred.
Why These Updates Matter for Founders & Early Recipients
Reduced risk of lost elections: Filing online helps avoid mail delays, lost letters, or misfilings.
Clearer and more uniform documentation: With a standard IRS form, there’s less ambiguity about what the election must state.
Better audit trail: Digital confirmation gives proof of timely filing.
Still urgent: The 30-day rule didn’t change. If you get restricted equity, you must act fast.
Strategic timing: Given the rising awareness of digital equity, founders should ensure that their grant processes, valuation memos, and board approvals align with clean 83(b) practices.
How Founders & Recipients Should Plan Now
As soon as you grant or receive restricted stock, mark the 30-day window and act immediately.
Use the new Form 15620 (online or in paper) — don’t default to a custom letter unless you have a specific reason.
Coordinate with your legal or tax advisors to confirm your stock’s fair market value (FMV) at grant (a 409A valuation or independent appraisal may help).
Make sure your cap table, equity agreements, and internal legal records reflect the 83(b) election and its date.
In hiring, equity grants, or cofounder splits, consider 83(b) consequences from day one — delaying too long may cost you.
For foreign or nonresident recipients, review special rules or limitations (some may have additional hurdles)
At WADR Law
As the founder of a law firm serving creatives, tech founders, and entertainment entrepreneurs, I’ve seen how easily mistakes around 83(b) can cost thousands or more in taxes. With the new digital filing in 2025, the process is smoother — but only if done correctly and timely.
If you’ve just formed your company, received equity, or are preparing to issue restricted stock, reach out now. Let’s make sure your 83(b) elections are clean, defensible, and built to protect your upside.