Introduction
Updated November 6, 2026. We'll refresh this as Microsoft shares more detail before the deadline.
The Microsoft Voluntary Exit Offer is a buyout open to about 60,000 employees at level 70 and below, on participating teams in the US, Canada, the UK and India. The reported signing deadline is December 9. If you say yes, your exit date is expected to be December 31, 2026. The rest of this post will give you the details and how to test if taking the VEO aligns with your family's plan.
If you opened your offer email this week, you have about a month: enough to do this properly, not enough to wait.
Exit offer, retirement program or layoff: what does the Microsoft severance package pay?
With the Voluntary Retirement Program earlier this year and several other companies announcing layoffs, it's tough to keep details straight. Here's how they compare, based on the info we've seen so far.
Voluntary Exit Offer (October) | Voluntary Retirement Program (April) | Layoff severance | |
|---|---|---|---|
Who's eligible | About 60,000, level 70 and below, participating teams in 4 countries | About 8,750 US employees at senior director and below | Whoever is cut |
Age or tenure test | None | Age plus years of service of 70 or more | None |
Your choice? | Yes | Yes | No |
Pay | Reported: 1 week of base pay per 6 months of service at level 64 and below, 2 weeks at 65 to 67, with a minimum of 8 weeks and a cap of 39; 12 months at level 68 | 8 to 39 weeks of base pay, by level and tenure | Standard severance |
Stock and healthcare | Reported: 6 or 12 months more vesting at level 67 and below, by tenure; up to 18 months of healthcare, the first 6 at no cost | Vesting continued 6 to 12 months; up to five years of coverage | Per the standard package |
Timing | Sign by December 9 (reported), leave December 31 | Closed | Set by Microsoft |
A "voluntary separation package" is the general term for the first two: you choose to leave and sign a release in exchange for pay and benefits.
Microsoft rejects the word buyout, calling this standard severance. April's richer extras were built for people near retirement. This offer is a career exit at any age. Its reported healthcare runs up to 18 months, only the first 6 free, and accepting reportedly bars you from rejoining Microsoft for two years.
I wrote about April's program for Kiplinger and why so many people weren't ready for it. The lesson carries over. The offer is only as good as the plan you put under it.
What does leaving mean for your stock, taxes and healthcare?
When clients bring me an offer like this, I don't start with the severance number. I start with what they give up and what the next three to five years look like without a paycheck. That's corporate exit planning, and it comes down to five questions.
What happens to RSUs when you leave a company?
Unvested RSUs are generally forfeited on your last day, December 31, unless your offer says otherwise. Offers reviewed by Business Insider keep vesting going 6 or 12 months at level 67 and below, depending on tenure. Your offer should list exactly which grants continue. If you're 55 with 15 years of service, the retirement terms in your award agreements may keep more of it vesting. Then put a dollar figure on what's left behind. Unvested stock you'd have earned by staying is the part of the golden handcuffs you're actually unlocking.
For the Microsoft ESPP, check whether your last purchase goes through before December 31, and count any 2027 bonus you'd give up.
How is severance taxed?
Severance is taxed as ordinary income, the same as salary. The IRS calls it supplemental wages, which just means pay outside your regular paycheck. In 2026, federal withholding on supplemental wages is usually a flat 22% up to $1 million, and 37% above that.
Your severance pay tax bill depends on your bracket, not the withholding. If your salary, bonus and vesting stock already put you in the 32% or 35% bracket, 22% withholding leaves a gap you'll owe in April. Any RSUs that keep vesting after you leave are taxed as wages in the year they vest.
Timing is where the planning is. If any severance is paid in January, it counts as 2027 income. And 2027 may be your lowest-income year in decades. In my Kiplinger piece I called these stretches Strategic Planning Windows: a short period when a lower bracket opens room for Roth conversions or for selling Microsoft shares at a lower capital gains rate. We estimate that year before you sign, so you know what the window is worth.
How do I cover healthcare until Medicare?
Your choices are your offer's healthcare benefit (reported as up to 18 months, the first 6 at no cost and the rest at your expense), COBRA (usually up to 18 months, at full cost), a spouse's employer plan, or an ACA marketplace plan. Leaving opens a marketplace enrollment window, and with income planned carefully, premiums can cost far less than COBRA. Price the full bridge to 65.
Can I use my 401(k) before 59½?
If you leave in or after the year you turn 55, the rule of 55 lets you take penalty-free withdrawals from your Microsoft 401(k). Rolling that money into an IRA and you lose that access until 59½. Decide before you move anything. It's important to consider your income plan across all early retirement years before making any moves.
What should I do with my Microsoft stock?
Once you leave, there's no work reason to keep so much of your net worth in one company. You can hold it, give it, hedge it, diversify around it, or sell it over several tax years. Our Guide to Concentrated Stock walks through our D.E.L.T.A. framework and how we put the important pieces in order for you.
Before you sign
Unvested RSUs and continued-vesting dates, valued in dollars
Last ESPP purchase date
Severance amount and payment date (2026 or 2027?)
Estimated tax for 2026 and 2027
Healthcare cost to age 65
Rule of 55 eligibility before any rollover
A plan for your Microsoft shares
Your signing deadline (reported as December 9) and the 7-day window to change your mind
Rehire terms: accepting reportedly rules out rejoining Microsoft for two years
"If I turn it down, my job is safe"
Not necessarily. Microsoft has said layoffs remain possible, and it cut about 15,000 roles in 2025 and about 4,800 in July 2026. Saying no keeps your job today. It doesn't lock it in.
The opposite fear misleads too. Microsoft expects fewer than 5% of those eligible to accept, and plans no follow-up offer. The offer isn't a signal that your team is next, and both answers can be right.
As always, we can't control the future of the company or the market, we have to focus on the specific plans that make sense for your family.
What this looks like: a Charlotte director, age 54
Hypothetical. Every figure is a round illustrative number, not a real client.
Dana is a senior director at Microsoft's Charlotte campus. She's 54 with a $250,000 salary, her spouse still works, and they own a small place at the coast. She has about $1.4 million in Microsoft stock, and $300,000 of RSUs are scheduled to vest in 2027.
The severance isn't a gain on its own. If she stays, she keeps earning. So the useful comparison is against what she'd actually do otherwise.
If she'd otherwise stay. Working through 2027 brings about $250,000 of salary, and all $300,000 of those RSUs vest. Say her offer pays $190,000 of severance and continues vesting for six months, so $150,000 of the RSUs still vest. Leaving means about $210,000 less before tax for 2027, in exchange for a year she doesn't have to work. Against staying, the offer softens a pay cut.
If she'd leave soon anyway. If Dana already planned to resign in 2027, resigning gets her no severance and forfeits whatever hasn't vested. Against that, the offer pays her $190,000 she would never see, plus six months of vesting, for leaving a little earlier than she planned.
The year after. With no salary in 2027, her income drops sharply. That opens room to sell a slice of her Microsoft stock at a lower capital gains rate and convert some of her IRA to Roth. Over two or three low years, that can be worth more than the gap above.
Healthcare. Her spouse's employer plan covers her for now. Without it, the offer's reported six free months would leave her paying for about 10 years of coverage before Medicare, and the answer could flip.
The stock. Whichever way she decides, she leaves with a schedule for bringing her Microsoft position down.
So for Dana, the question isn't the size of the check. It's how much longer she would have stayed. If the answer is years, the offer costs her money. If it's months, it pays her to leave close to when she would have anyway. Someone without a spouse's coverage could rightly say no to the same offer.Frequently asked questions
Frequently asked questions
Who is eligible for Microsoft's Voluntary Exit Offer? Employees at level 70 and below on participating teams in the US, Canada, the UK and India, about 60,000 people. There's no age or tenure requirement. Reported participants include Xbox, Windows, Copilot, finance and HR; parts of sales, marketing, security and data centers are reportedly excluded. Your offer email confirms whether you qualify.
When is the deadline to accept Microsoft's buyout? Reported terms set the signing deadline at December 9, 2026, 11:59 p.m. Pacific, with seven days to revoke after you sign. If you accept, you leave Microsoft on December 31, 2026. Your offer has the date that applies to you so be sure to check your own info thoroughly.
Should I take the Microsoft VEO? If you'd likely leave within a year or two anyway and your plan works without your Microsoft paycheck once you count taxes, forfeited stock and healthcare then it merits looking further. If leaving now costs more than you'd gain from choosing your own timing it might not be for you. A large check alone isn't a reason. Either way, now is the right time to prepare your exit plan so you can feel confident in your future moves.
What happens to my unvested RSUs if I take the buyout? Unvested RSUs are generally forfeited when you leave. Reported offers keep vesting going 6 or 12 months at level 67 and below, depending on tenure. Your offer lists which grants continue.
How is a severance package taxed? As ordinary income, like salary. Federal withholding on supplemental wages is 22% up to $1 million in 2026, and 37% above that. If your bracket is higher than 22%, expect to update withholdings, pay estimated taxes and/or owe more when you file.
Can I still get laid off if I turn down the offer? Yes. Microsoft has said layoffs remain possible. Declining keeps your job for now but doesn't guarantee future company changes won't happen.
Is the Voluntary Exit Offer the same as the Voluntary Retirement Program? No. April's program required age plus service of 70 or more and included up to five years of healthcare. The October offer has no age test, follows Microsoft's standard severance terms and reportedly includes up to 18 months of healthcare.
Can I take the buyout and work somewhere else? Generally yes. The offer is built for people considering a future outside Microsoft. Read your agreement for any limits, such as non-solicitation terms, before you accept a new role. Accepting reportedly means Microsoft won't rehire you for two years.
A month is enough, if you start now
This offer is a rare thing: a chance to leave a big company on a date you chose, with a package attached. Whether you take it or stay, the corporate exit planning work is the same. Price what you give up, plan the next three years of taxes and healthcare, and decide what to do with the stock.
If you decide to pull the ripcord, pull it with a plan.
If you've got an offer in your inbox and a month to decide, let's talk it through. Click here to schedule an intro call with Zach
