Offered a Voluntary Buyout on H-1B? The Severance, Grace-Period and Green Card Math Before You Sign
On H-1B or STEM OPT, a voluntary buyout is a choice with a fixed exit date. What you ask HR before you sign decides whether it costs you status, your I-140 or your runway.
Part of our guide to the H-1B 60-day grace period.
Taking a voluntary buyout on H-1B ends the job your status rests on, on a date you agree to in advance. As of 2026-11-01 the worker grace period is in effect: up to 60 consecutive days after the employment ends, or less if your authorized validity period ends sooner, once per validity period, with no work allowed. DHS's plan to eliminate it is only proposed. So the cash is rarely the deciding number. What decides it is whether a new employer, a change of status or a move abroad you want is lined up before your last day.
Status line, as of 2026-11-01:
- In effect: the grace period (8 CFR 214.1(l)(2)); DOL's announced PERM suspension of eight named employers, Microsoft among them (2026-10-08; no written notice, no stated end date). It is not an H-1B suspension.
- Proposed: eliminating the grace period (RIN 1615-AD22); comments close 2026-11-10, 11:59 p.m. ET. Closing comments does not make it final, so check the Federal Register docket after that date.
- The dated example: on 2026-10-26 Microsoft offered voluntary exit packages to about 60,000 people (roughly 27% of its workforce) at level 70 and below on participating teams in the US, Canada, India and the UK, according to CNBC. Takers decide by early December and leave on 2026-12-31; Fortune reported expected uptake under 5%. It is a buyout offer, not a layoff.
Should you take a voluntary buyout on H-1B? The short answer
A voluntary buyout on H-1B is easiest to manage when your next status is already moving: a new employer ready to file before your exit, a change of status that can be filed in time, or a departure you want anyway. As of 2026-11-01 the window after separation is at most 60 days, and a payout does not extend it.
The package buys money, not time. Microsoft's offer has its own guide to the December 31 exit on H-1B; this page is the decision framework for any voluntary package.
What you trade away when you accept
A buyout pays you to give up the rest of your approval period, your place in your employer's green card process and, often, its duty to fly you home.
What changes when you accept a voluntary package (rules as of 2026-11)
| What you hold | If you decline | If you accept | Rule |
|---|---|---|---|
| H-1B status | Continues | Ends with the job; up to 60 days of grace, no work | 8 CFR 214.1(l)(2) |
| Approved H-1B petition | Stays approved | Revoked automatically once the employer tells USCIS you no longer work there | 8 CFR 214.2(h)(11)(ii) |
| Return airfare | Not at issue | Owed on dismissal; a voluntary exit is not one | 8 CFR 214.2(h)(4)(iii)(E) |
| Pending PERM | Continues (at the eight named firms, under DOL's announced suspension) | Stays the old employer's case | Employer's filing |
| I-140 approved 180+ days | Kept | Stays approved even if withdrawn, unless revoked on other grounds | 8 CFR 205.1(a)(3)(iii)(C) |
| H-4 family | Unaffected | Their status follows yours | 8 CFR 214.1(l)(2) covers dependents |
The airfare row is the one most people miss. The H-1B regulation says that if the beneficiary "voluntarily terminates his or her employment prior to the expiration of the validity of the petition, the alien has not been dismissed." A buyout you choose looks voluntary (our reading), so ask whether the package covers a flight.
Does a voluntary buyout start my H-1B grace period?
Generally yes, from the day your employment ends. On our reading, the rule turns on the end of the job, not on who ended it. 8 CFR 214.1(l)(2) protects you "for up to 60 consecutive days or until the end of the authorized validity period, whichever is shorter, once during each authorized validity period," and you may not work during it. Our post on whether you get a grace period if you quit your H-1B job covers resignations.
Which date starts the clock? Packages can split your last day of work, last day as an employee and last day on payroll. If you are sent home early but kept on payroll, the conservative reading in our explainer on severance and when the H-1B grace period clock starts starts the clock on your last day of actual work; ask an attorney which date counts for you. A lump sum paid after you separate does not move the date.
The proposal. The DHS proposal (91 FR 57807; about 27,000 comments as of 2026-11-01) would remove 214.1(l)(2) for E-1, E-2, E-3, H-1B, H-1B1, L-1, O-1 and TN workers and dependents. That would leave only the 10 days after a petition's validity period, counted from your approval's end date, not your exit. It is proposed, not final, and no 30-day or 180-day H-1B grace period exists or is proposed. A plan that only works on day 59 is fragile either way.
The best buyout uses zero grace-period days
Unlike a layoff, a buyout comes with notice, so the grace period can be your backup rather than your plan.
H-1B portability lets you start new employment "upon the filing" of a nonfrivolous H-1B petition, "or as of the requested start date, whichever is later." If a new employer files Form I-129 while you are still employed, with a start date right after your exit, you move from one job to the next without spending grace-period days (our reading). Two limits: the employer needs a certified Labor Condition Application from DOL before it can file, and portability work "automatically ceases" when USCIS decides the petition, so a denial ends it. If you were already counted against the cap, the petition is usually not a new lottery entry. Check whether your agreement lets you leave early and keep the payout.
Worked timeline: planning backward from a 2026-12-31 exit (as of 2026-11)
| Date | Milestone | Note |
|---|---|---|
| 2026-11-09 (Mon) | USCIS accepts only the 09/09/26 Form I-129 (scheduled) | USCIS I-129 page |
| 2026-11-10 (Tue) | Grace-period comments close | Still a proposal after this date |
| Early December | Decision deadline | Your offer letter governs |
| 2026-12-11 (Fri) | Federal funding (the current CR) runs through this date | Unless Congress passes funding by then, a lapse could, by precedent and according to reports, pause DOL's LCA processing, which an H-1B filing needs first |
| Before 2026-12-31 | New employer files your I-129 | Zero grace days used |
| 2027-01-01 (Fri) | Day 1 of the grace period | Our arithmetic |
| 2027-03-01 (Mon) | Day 60 | Earlier if your I-797 or I-94 ends first |
The cash math: money clock against status clock
Run two clocks. The money clock is the package after tax plus savings you would spend, divided by monthly costs, including health coverage and a move home if needed. The status clock runs from your last day employed to day 60 or your I-797 or I-94 end date, whichever comes first. If the money clock is longer, cash is not your constraint, and a bigger package does not fix a short window. If it is shorter, you may be pushed into the first sponsoring offer. Our guide to sizing an emergency fund under visa uncertainty covers the savings side.
Be honest about job-search odds. One vendor's read of 2,718 US engineering roles on 2026-10-13 found 88.1% of postings silent on sponsorship and 0.4% explicitly offering it, according to Match.dev (a single-vendor sample). Count employers that have confirmed they will file for you, not applications sent.
How is buyout severance taxed on H-1B?
As wages. IRS Publication 525 says "Severance payments are wages subject to social security and Medicare taxes," and to income tax withholding. Timing matters.
Paid in December 2026 or January 2027? (as of 2026-11)
| Item | December 2026 | January 2027 |
|---|---|---|
| Tax year | 2026 | 2027 |
| Social Security wage base / maximum employee tax | $184,500 / $11,439 | $192,300 / $11,922.60 (SSA) |
| Medicare | 1.45%, no cap; extra 0.9% withheld above $200,000 | Same |
| Federal brackets (single) | Published (24% over $105,700) | Not published |
Our reading: if your 2026 wages already passed $184,500, a December lump sum carries no more Social Security tax, while a January payment counts toward the 2027 base. Leaving the US in 2027 can also make you a dual-status filer. On STEM OPT, nonresident F-1 students are generally exempt from Social Security and Medicare on OPT pay under IRC 3121(b)(19); whether that covers severance is a question for a tax professional who handles nonresident returns.
Price a 401(k) cash-out before counting it as runway: before age 59 1/2 it generally carries a 10% additional tax unless an exception applies (IRS Topic 558), and a plan paying a nonresident alien must generally withhold 30% absent documentation for a lower treaty rate. More in 401(k) withdrawals when you leave the US.
Health coverage after the exit
The Department of Labor's COBRA page says COBRA covers plans of "employers with 20 or more employees in the prior year," and you "may be required to pay the entire premium for coverage up to 102% of the cost to the plan." The Marketplace fallback is shrinking: from tax years after 2026-12-31 the premium tax credit is scheduled to be zero for lawfully present people who are not "eligible aliens," which state summaries say includes H-1B, H-4 and F-1/OPT holders (proposed IRS rules, comments due 2026-11-30). Unemployment benefits depend on state law and your work authorization, so ask your state agency.
Can I ask my employer to keep my H-1B petition active?
You can ask, but it generally would not extend your status, which rests on the employment, not the paperwork. Under 8 CFR 214.2(h)(11), "The approval of an H-1B petition is also immediately and automatically revoked upon notification from the H-1B petitioner that the beneficiary is no longer employed." Employers have their own reason to notify promptly: DOL ends the wage duty only on "a bona fide termination," which includes notifying DHS (20 CFR 655.731(c)(7)(ii)).
What moves your dates is the separation agreement, not the letter. The timing request that does matter concerns an approved I-140.
What happens to my pending PERM or I-140 if I take a buyout?
Neither becomes a new employer's case, because both belong to the old job offer. What survives is what the AC21 rules in 8 CFR 214.2(h)(13)(iii)(D) and (E) protect.
- PERM or I-140 filed 365+ days ago: can support one-year extensions past six years with a new employer, which "need not be the employer that filed" it, until an approved labor certification expires or there is a final denial, a revocation, or a decision to "Administratively or otherwise close" the case. Practitioners read a suspended PERM as still counting (practitioner analysis, not agency guidance).
- PERM under 365 days old: a petitioner "may not aggregate" its days with another filing's days to reach 365.
- I-140 approved: can support three-year extensions when the per-country limit holds your visa back. Under 8 CFR 205.1(a)(3)(iii)(C), one withdrawn "180 days or more after its approval ... remains approved unless its approval is revoked on other grounds." Withdrawn sooner, it is revoked unless a related I-485 has been pending 180 days or more.
- The catch: a withdrawal still rescinds the job offer, so you "must obtain a new employment-based preference petition" for the green card unless I-485 portability under section 204(j) applies. 8 CFR 204.5(e) generally carries an approved I-140's priority date to a later petition unless the approval is revoked for fraud, misrepresentation, a labor-certification revocation or invalidation, or material error.
If your I-140 was approved fewer than 180 days before your exit date, ask in writing when the employer plans to withdraw it. Our guide to a layoff with a pending I-140 and AC21 goes deeper. In year five or six of H-1B time, this may outweigh the cash.
Can I take a buyout on STEM OPT?
Eligibility is your employer's call, and your limit is unemployment days, not an H-1B grace period.
The SEVIS Help Hub allows 150 days of unemployment in aggregate on STEM OPT, including days used on post-completion OPT, counting each day "without employer information." USCIS's STEM OPT page says the employer must "Report the STEM OPT student's termination of employment or departure to the DSO within 5 business days"; you report an employer change within 10 days, and a new employer must be enrolled in E-Verify and sign a Form I-983 training plan. The trap is cap-gap: USCIS's cap-gap page says the extension "will automatically terminate" if the H-1B petition is withdrawn, which is likely once you leave the employer that filed it. Take these questions to your DSO, not HR.
If no sponsoring offer lands in time
8 CFR 214.1(l)(3) lets you apply for a change or extension of status during the grace period "if otherwise eligible." People weigh H-4 through a spouse, F-1 for a new degree, a cap-exempt employer, O-1, or a B-2 filing on Form I-539 to wind down ($470 paper, $420 online on G-1055, edition 10/26/26). Whatever the route, the filing has to be complete: under PA-2026-05 (in effect since 2026-08-05, challenged in AAUP v. Mullin), officers may deny without a request for evidence when required initial evidence is missing. Let an immigration attorney choose the route.
Decision worksheet: score the package before you sign
| Question | Leans toward accepting | Leans toward declining |
|---|---|---|
| Will a new employer file before your exit? | Offer in hand | No interviews yet |
| When do your I-797 and I-94 end? | Well past day 60 | Within 60 days of exit |
| Green card stage | No PERM, or I-140 approved 180+ days | PERM under 365 days, or I-140 under 180 days |
| H-1B years used | Early | Year five or six without a qualifying filing |
| Money clock vs status clock | Covers the window plus a move home | Would not cover a move home |
| Family | No dependents, or spouse with own status | H-4 family relies on you |
Two or more answers in the right column are a reason to get advice before the deadline.
Questions to send HR and the immigration team, in writing
- Ask HR to put your last day of work, last day of employment and last day on payroll in the separation agreement.
- Ask the immigration team when it will send USCIS the 8 CFR 214.2(h)(11) letter, what it plans for your PERM, and the date of any I-140 withdrawal.
- Ask whether you may leave early and keep the package if a new employer files Form I-129, and whether return transportation is included.
- Ask payroll whether the payout is a lump sum or salary continuation, and which year's Form W-2 shows it.
- Ask benefits when coverage ends, when the COBRA notice arrives, and what happens to unvested equity.
- Request an employment verification letter and final pay stubs for a new employer's petition.
- Pull your latest I-797 and your I-94 record, and note which ends first.
- Book your own immigration attorney, your DSO if on STEM OPT, and a tax professional for nonresident returns.
Common mistakes
- Treating it like a layoff. You can decline, and you get notice; job-hunt while employed.
- Counting on a full 60 days. The window ends with your authorized validity period if that comes first.
- Measuring runway in dollars only. More cash does not lengthen a short status clock.
- Assuming a paid flight home. The rule says a voluntary resignation is not a dismissal.
- Treating the proposal as settled. Before your exit, check the Federal Register for any final rule under RIN 1615-AD22.
Frequently asked questions
Does a voluntary buyout start my H-1B grace period?
Generally yes, from the day your employment ends, because on our reading 8 CFR 214.1(l)(2) turns on the end of the job, not on who chose it. As of 2026-11-01 it allows up to 60 consecutive days, or less if your authorized stay ends sooner, with no work. A DHS proposal to eliminate it (comments close 2026-11-10) is not final.
Can I ask my employer to keep my H-1B petition active after I leave?
You can ask, but it generally would not extend your status. Your status rests on the job, and once your employer tells USCIS you no longer work there, the H-1B approval is automatically revoked. A later last day of employment in your agreement is what moves the clock. The timing request that can matter is when an approved I-140 is withdrawn.
What happens to my pending PERM or I-140 if I take a buyout?
Neither moves to a new employer, which would generally start its own green card case. Under AC21, a PERM or I-140 filed 365 or more days earlier can support one-year H-1B extensions past six years with a new employer until it is denied, revoked or closed. An I-140 withdrawn 180 days or more after approval stays approved unless revoked on other grounds. Ask an immigration attorney to apply this to your dates.
Is buyout severance taxed as wages?
Generally yes. IRS Publication 525 says severance payments are wages subject to Social Security, Medicare and income tax withholding. A December 2026 or January 2027 payment falls in a different tax year and Social Security wage base ($184,500 for 2026, $192,300 for 2027). A nonresident F-1 student on STEM OPT may be FICA-exempt, so ask payroll and a tax professional who handles nonresident returns.
Can I take a buyout on STEM OPT?
Eligibility is your employer's call, but your limit is unemployment days. STEM OPT allows 150 days in total, including days used on post-completion OPT. Your employer must report your departure to your DSO within 5 business days, and a new employer must be enrolled in E-Verify. A withdrawn H-1B petition ends any cap-gap, so talk to your DSO before you sign.
Sources
- Cornell LII: 8 CFR 214.1, 8 CFR 214.2, 8 CFR 205.1, 8 CFR 204.5, 20 CFR 655.731
- Federal Register: grace-period proposal, premium tax credit proposal
- USCIS: I-129, STEM OPT, cap-gap, G-1055; SEVIS Help Hub
- IRS Publication 525, Topic 558 and plan distributions to foreign persons; SSA 2027 notice; DOL COBRA
- CNBC (2026-10-26) and Fortune (2026-10-30) on Microsoft's offer; Match.dev (read 2026-10-13) on sponsorship language in postings
How we checked this: we read the regulation text on Cornell LII and the USCIS, IRS, DOL, SSA and SEVP pages above against our 2026-11-01 facts brief, on 2026-11-01 and 2026-11-02.
This is general information, not legal or tax advice; your own I-797, I-94 and separation agreement, and your attorney, DSO or tax professional, govern your situation.
If you are weighing a package and want a search for sponsoring employers running before your deadline, F1Jobs can talk through a realistic timeline with you.
Frequently asked questions
Does a voluntary buyout start my H-1B grace period?
Generally yes, from the day your employment ends, because on our reading 8 CFR 214.1(l)(2) turns on the end of the job, not on who chose it. As of 2026-11-01 it allows up to 60 consecutive days, or less if your authorized stay ends sooner, with no work. A DHS proposal to eliminate it (comments close 2026-11-10) is not final.
Can I ask my employer to keep my H-1B petition active after I leave?
You can ask, but it generally would not extend your status. Your status rests on the job, and once your employer tells USCIS you no longer work there, the H-1B approval is automatically revoked. A later last day of employment in your agreement is what moves the clock. The timing request that can matter is when an approved I-140 is withdrawn.
What happens to my pending PERM or I-140 if I take a buyout?
Neither moves to a new employer, which would generally start its own green card case. Under AC21, a PERM or I-140 filed 365 or more days earlier can support one-year H-1B extensions past six years with a new employer until it is denied, revoked or closed. An I-140 withdrawn 180 days or more after approval stays approved unless revoked on other grounds. Ask an immigration attorney to apply this to your dates.
Is buyout severance taxed as wages?
Generally yes. IRS Publication 525 says severance payments are wages subject to Social Security, Medicare and income tax withholding. A December 2026 or January 2027 payment falls in a different tax year and Social Security wage base ($184,500 for 2026, $192,300 for 2027). A nonresident F-1 student on STEM OPT may be FICA-exempt, so ask payroll and a tax professional who handles nonresident returns.
Can I take a buyout on STEM OPT?
Eligibility is your employer's call, but your limit is unemployment days. STEM OPT allows 150 days in total, including days used on post-completion OPT. Your employer must report your departure to your DSO within 5 business days, and a new employer must be enrolled in E-Verify. A withdrawn H-1B petition ends any cap-gap, so talk to your DSO before you sign.