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VSIP buyout

VSIP calculator

This VSIP calculator estimates a federal buyout the way the law sets it: the lesser of the severance pay you would be entitled to and the $25,000 cap. It then takes out federal withholding at the 22 percent supplemental-wage rate, Social Security, Medicare and the state rate you type, so you can see a take-home figure next to the gross.

The calculator

What the calculator shows

  • Your estimated take-home, after the withholding lines below.
  • Your severance entitlement, the formula the VSIP is measured against.
  • The VSIP amount, the lesser of that entitlement and the cap, with a flag when the cap decides it.
  • Federal withholding at 22 percent, the IRS flat rate for supplemental wages.
  • Social Security at 6.2 percent and Medicare at 1.45 percent, as separate lines.
  • State withholding at the percent you type.
  • The repayment rule, in one line, beside the result.

Your inputs

Prefilled with an example so the result is never empty. Change any number; the result updates as you type.

Educational estimate on the assumptions you entered

$16,588

take-home from a $25,000 buyout after withholding

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Your severance entitlement
$41,020
VSIP amount
$25,000: the lesser of the entitlement and the $25,000 cap (cap applies)
Federal withholding, 22% flat
$5,500.00
Social Security, 6.2%
$1,550.00
Medicare, 1.45%
$362.50
State, 4%
$1,000.00
Repayment
Accept federal employment for pay within 5 years and you repay the entire gross VSIP before your first day, unless a waiver applies

Assumptions behind this estimate

  • You hold an offer. A VSIP exists only when your agency offers one within an approved authority; the calculator does not test eligibility.
  • Age counts in whole years here, so the age adjustment can run up to three quarters lower than OPM's month-level count. When the cap decides the amount, the difference does not show.
  • Withholding uses the 22 percent flat method. Your payroll office may use the aggregate method instead, and withholding is not your final tax bill.
  • Social Security stops at the 2026 wage base of $184,500 (IRS Publication 15, retrieved 2026-10-13); the calculator applies it to the VSIP alone, not to wages you already earned this year.
  • The 0.9 percent Additional Medicare Tax on wages over $200,000 in a year is not modeled (IRS Publication 15, retrieved 2026-10-13).
  • The annual leave lump sum is separate. It is paid on top of the VSIP; run the annual leave calculator for it.

Educational estimate on the assumptions you entered, not a projection or a promise and not OPM's official computation. FFEBA is an education organization, not a financial advisor, and does not give personalized financial, tax or legal advice.

Inputs you will enter

  • Annual rate of basic payYour full-time annual rate when you separate, locality pay included. Do not add awards or bonuses.
  • Years of serviceFull years of creditable service, counted the way severance pay counts them. Military service counts only if it interrupted civilian service and you returned on a restoration right (OPM, retrieved 2026-10-13).
  • Extra monthsMonths past your last full year, 0 to 11. Only full 3-month blocks count.
  • Age at separationYour age in whole years on the day you separate. It drives the age adjustment in the severance formula.
  • VSIP capThe ceiling in your offer. $25,000 is the cap in 5 U.S.C. 3523 (retrieved 2026-10-13). Type a higher cap only if your written offer states that amount.
  • State income tax withholdingThe percent your state withholds on supplemental wages. Enter 0 if your state has no income tax. Check your state revenue department for the rate.

How we compute it

We run the same severance formula as the severance pay estimator: one week of basic pay per year through 10 years, two weeks per year after, 25 percent of a week's credit per full 3 months, and 2.5 percent more for each full 3 months of age over 40, limited to 52 weeks of pay (OPM, retrieved 2026-10-13). The VSIP is the lesser of that figure and the cap, paid in a lump sum after you separate (5 U.S.C. 3523, retrieved 2026-10-13).

Withholding uses the IRS optional flat rate of 22 percent for supplemental wages, a category the IRS says includes severance pay (IRS Publication 15, retrieved 2026-10-13). Social Security is 6.2 percent on wages up to the 2026 wage base of $184,500, and Medicare is 1.45 percent (IRS Publication 15, retrieved 2026-10-13). State withholding is the percent you type.

To be offered a VSIP you generally need an appointment without time limitation and at least 3 years of current continuous service, and your agency needs OPM approval before it makes offers (5 CFR 576.101 and 576.102, retrieved 2026-10-13). Agencies with their own VSIP authority, such as the Department of Defense, do not need OPM approval (OPM, retrieved 2026-10-13). If you accept federal employment for pay within 5 years, the whole VSIP is repaid before your first day back (5 CFR 576.202, retrieved 2026-10-13).

$25,000VSIP cap in 5 U.S.C. 3523OPM, retrieved 2026-10-13
5 yearsWindow in which returning to federal work triggers repayment5 CFR 576.202, retrieved 2026-10-13
22%IRS optional flat withholding rate on supplemental wagesIRS Publication 15, retrieved 2026-10-13
3 yearsContinuous service generally needed to be offered a VSIP5 CFR 576.101, retrieved 2026-10-13

A worked example

An employee with an annual rate of basic pay of $83,480, 14 years and 5 months of service, takes a buyout at 44. The weekly rate is $83,480 / 2,087 x 40 = $1,600. Service credit is 18.5 weeks, so basic severance is $29,600; 16 full quarters over 40 add 40 percent, $11,840, for a severance entitlement of $41,440. The VSIP is the lesser of $41,440 and $25,000, so the cap decides it: $25,000.

Withholding at the rates above is $5,500 federal (22%), $1,550 Social Security (6.2%), $362.50 Medicare (1.45%) and, at a 4 percent state rate, $1,000. Take-home is $25,000 - $8,412.50 = $16,587.50. A newer employee at $62,610 with 4 years of service at 38 would compute to 4 weeks at $1,200, or $4,800, below the cap, so the VSIP is $4,800. Both are educational estimates on the assumptions shown.

What to do with your estimate

Read RIF, early outs and buyouts for how a VSIP pairs with an early out, then add the annual leave lump sum paid at separation. If the buyout comes with a retirement, run the FERS pension estimator on your separation date, and if the offer is a RIF instead, the severance pay estimator shows that path. More calculators are on the tools page.

FFEBA is an education organization. If you want someone to look at your own numbers, we can match you with a Federal Retirement Consultant (FRC), a professional trained on federal benefits. The FRC designation is listed with FINRA. The first review is free, nothing is booked until you choose a time, and you are never obligated to work with anyone we introduce. Get matched with an FRC.

Questions about this calculator

How is a VSIP buyout calculated?

A VSIP is the lesser of two amounts: the severance pay you would be entitled to under 5 U.S.C. 5595(c), computed without adjustment for any earlier payment, and an amount your agency head sets, not over $25,000 (5 U.S.C. 3523, retrieved 2026-10-13). For many mid-career employees the severance formula is larger, so the cap decides it.

Is a VSIP taxed?

Yes. OPM says the payment is reduced by federal, state, Social Security and Medicare taxes, as appropriate (OPM, retrieved 2026-10-13). It is withheld on as wages, not as an annuity. The IRS optional flat rate for supplemental wages is 22 percent, rising to 37 percent on supplemental wages over $1 million in a year (IRS Publication 15, retrieved 2026-10-13). Withholding is not your final tax; your return settles that.

Do I have to pay back a VSIP?

Only if you go back to work for the federal government for pay within 5 years of the separation. Then you must repay the entire VSIP to the agency that paid it before your first day, unless a narrow waiver applies (5 CFR 576.202, retrieved 2026-10-13).

Can I take a VSIP and retire?

Yes. A VSIP can be offered to employees who separate by resignation, early retirement or optional retirement (5 CFR 576.103, retrieved 2026-10-13). The payment is not counted in computing any other government benefit, so it does not raise your high-3 or your annuity (5 U.S.C. 3523, retrieved 2026-10-13).

Can I get a VSIP and severance pay?

No. OPM explains that a VSIP rests on a voluntary separation and severance pay requires an involuntary one, so the same separation cannot qualify for both (OPM, retrieved 2026-10-13).

Is this the amount my agency pays?

No. This is an educational estimate on the inputs you type. Your agency's offer sets the amount, and its payroll office decides the withholding method. Read your written offer before you rely on any figure.

Reviewed by the FFEBA education team. Last reviewed October 2026.

Sources

  1. U.S. Office of Personnel Management, voluntary separation incentive payments, retrieved 2026-10-13
  2. Electronic Code of Federal Regulations, 5 CFR part 576 (voluntary separation incentive payments), retrieved 2026-10-13
  3. U.S. Office of Personnel Management, severance pay frequently asked questions, retrieved 2026-10-13
  4. U.S. Office of Personnel Management, fact sheet: severance pay estimation worksheet, retrieved 2026-10-13
  5. Internal Revenue Service, Publication 15 (Circular E), Employer's Tax Guide, retrieved 2026-10-13

Every government figure on this page carries its source and retrieval date. Worked examples are educational estimates on the assumptions shown, not a projection of any person's benefit. FFEBA is an education organization, not a financial advisor.

Keep reading

Read the rule behind the math.