Last Updated: August 26, 2026 Reading Time: 8 min
Agencies advertise the buyout as "$25,000." The deposit that hits your bank account is $15,000 to $17,588, depending on where you live. Before you build a resignation plan around a headline number, here is the computed take-home math nobody publishes, plus the repayment rule that can cost you $9,600 out of pocket if you come back.
What a $25,000 VSIP Actually Deposits, State by State
VSIP is supplemental wages under IRS Publication 15, so payroll withholds a flat 22% federal, plus Social Security (6.2%), Medicare (1.45%), and your state's cut. Here is the math at the standard cap:
| Where You Pay State Tax | Federal 22% | Social Security | Medicare | State | Net Deposited |
|---|---|---|---|---|---|
| TX / FL / NV / WA (0%) | $5,500 | $1,550 | $363 | $0 | $17,588 |
| Pennsylvania (3.07%) | $5,500 | $1,550 | $363 | $768 | $16,820 |
| Virginia (5.75%) | $5,500 | $1,550 | $363 | $1,438 | $16,150 |
| New York State (6.85%) | $5,500 | $1,550 | $363 | $1,713 | $15,875 |
| Maryland (~8.75% w/ county) | $5,500 | $1,550 | $363 | $2,188 | $15,400 |
| California (~9.3%) | $5,500 | $1,550 | $363 | $2,325 | $15,263 |
| New York City (state + city) | $5,500 | $1,550 | $363 | $2,588 | $15,000 |
FedTools 2026 analysis. Withholding at payment, not final liability; state rates are representative marginal rates. Your agency may round differently.
Maryland feds keep about $750 less than their Virginia colleagues on the identical buyout, and about $2,200 less than a fed separating from a Texas duty station.
DoD's $40,000 VSIP: Same Math, Bigger Numbers
Defense civilians have permanent $40,000 authority under 10 U.S.C. 1597. Most other agencies stay capped at $25,000; the bill to raise that cap governmentwide (our HR 7256 coverage) has not moved.
| Where You Pay State Tax | Total Withheld | Net Deposited |
|---|---|---|
| TX / FL / NV / WA | $11,860 | $28,140 |
| Pennsylvania | $13,088 | $26,912 |
| Virginia | $14,160 | $25,840 |
| New York State | $14,600 | $25,400 |
| Maryland | $15,360 | $24,640 |
| California | $15,580 | $24,420 |
The 22% Is Not Your Tax Rate: What Happens in April
The flat 22% is only what payroll withholds. Your real tax on the VSIP is your marginal bracket when you file, and the VSIP stacks on top of everything else you earned that year, including your salary through the separation date and any annual leave lump sum.
| Your 2026 Marginal Bracket | Withheld on $25K | Actual Tax | At Filing |
|---|---|---|---|
| 12% (single, under ~$50,400 taxable) | $5,500 | ~$3,000 | ~$2,500 refund |
| 22% (to ~$105,700) | $5,500 | ~$5,500 | roughly even |
| 24% (to ~$201,775) | $5,500 | ~$6,000 | owe ~$500 |
| 32% (to ~$256,225) | $5,500 | ~$8,000 | owe ~$2,500 |
Bracket thresholds from the IRS 2026 inflation adjustments, single filer, taxable income.
The practical read: a GS-13 or GS-14 in a high-cost locality who separates mid-year with a VSIP on top of eight months of salary often lands in the 24% bracket or higher and owes at filing. A fed who separates early in the year at a lower grade may sit in the 12% bracket and get a meaningful refund. Neither outcome shows up in the deposit.
You also cannot shelter it. VSIP is not basic pay under 5 CFR Part 576, so it cannot be contributed or deferred into the TSP. The payment simply arrives as fully taxable cash.
The Wage-Base Timing Play Nobody Mentions
Social Security tax stops at $184,500 of earnings in 2026. If your year-to-date pay has already crossed that line when the VSIP pays out, the 6.2% never applies to it:
| Situation | SS Tax on $25K VSIP | Net (VA example) |
|---|---|---|
| Below the wage base | $1,550 | $16,150 |
| Already past $184,500 YTD | $0 | $17,700 |
Who crosses it? GS-15s in high localities, SES, physicians and other title-38 employees, and anyone whose salary plus awards clears the line late in the year. If you have any flexibility on the separation window and you're near the threshold, a later payment date is worth $1,550 on a $25K VSIP and $2,480 on a $40K one. No competitor guide covers this.
The Gross Repayment Trap: You Repay $25,000, Not $15,400
Under 5 U.S.C. 3524(b), taking any federal position within 5 years of a VSIP, including work under a personal-services contract, requires repaying the entire amount of the incentive before your first day back. The entire amount means gross:
| VSIP | State | Net You Received | You Must Repay | Cash Gap |
|---|---|---|---|---|
| $25,000 | Texas | ~$17,588 | $25,000 | $7,412 |
| $25,000 | Virginia | ~$16,150 | $25,000 | $8,850 |
| $25,000 | Maryland | ~$15,400 | $25,000 | $9,600 |
| $40,000 | Virginia | ~$25,840 | $40,000 | $14,160 |
| $40,000 | Maryland | ~$24,640 | $40,000 | $15,360 |
The tax code eventually gives back what you paid on the repaid income, through IRC 1341's claim-of-right rules if you repay in a later year, but that relief arrives at your next filing. The cash has to come out of your pocket up front. With GovExec reporting about 20,600 backfills for positions vacated in the recent separation waves, rehiring is not hypothetical; feds are getting called back, and the ones who took incentives face this exact bill.
Run Your Own Decision Math
The take-home number is one input in a bigger decision. Our free Buyout Decision Quiz walks through eligibility, the dollar tradeoffs, and the questions to answer before you sign, and the VERA/VSIP agency tracker shows which agencies currently have offers on the table. Start the quiz →
Frequently Asked Questions
How much of a $25,000 VSIP do you actually take home?
Between about $15,000 and $17,588 after withholding, depending on your state. Federal withholding takes $5,500, Social Security $1,550, Medicare $363, and state tax takes $0 to $2,588.
Is VSIP taxed at a higher rate than regular pay?
No. The 22% is a withholding rate for supplemental wages, not a special tax. Your final tax follows your marginal bracket: 12%-bracket feds get a refund, 24%-and-up feds owe more at filing.
Can I put my VSIP into the TSP?
No. VSIP is not basic pay, and TSP contributions can only come from basic pay. There is no deferral option.
What happens if I return to federal work within 5 years?
You must repay the full gross VSIP before your first day back, even though you received thousands less after taxes. Same-year repayment unwinds cleanly; later-year repayment works through IRC 1341, but you front the cash either way.
Does the $40,000 cap apply to my agency?
DoD civilians have permanent $40,000 authority. Most other agencies are capped at $25,000, and the bill to raise the governmentwide cap has not become law.
Does Social Security tax always hit a VSIP?
Only below the $184,500 wage base. If your year-to-date earnings already passed it, the 6.2% doesn't apply, and your VSIP nets $1,550 more at the $25K level.
Related Resources
- Buyout Decision Quiz: Whether the incentive actually beats staying, in your situation.
- VERA/VSIP Fall 2026 Agency Tracker: Which agencies have live offers right now.
- The $40K Buyout Cap Bill: Where HR 7256 stands.
- Federal Take-Home Pay Calculator: Model your regular paycheck withholding.
Sources: IRS Publication 15 (22% supplemental rate), IRS 2026 inflation adjustments, 5 U.S.C. 3524, 5 CFR Part 576, 10 U.S.C. 1597, OPM VSIP guidance.