Insights

With all the recent changes and layoffs at Microsoft, we are refreshing one of our most-read resources. We received feedback that this article provided helpful clarity during last year’s layoffs, and we hope you find it helpful today. As always, we are a resource for you.

Whether you’ve already received notice, passed on the Voluntary Retirement Program earlier this year, or are concerned your role may be at risk, this guide walks through the most important financial steps to help you stay on track.

If you find it helpful, please share it with others who may benefit.

What We Know About the July 2026 Microsoft Layoffs

In early July, Microsoft announced another round of layoffs, roughly 4,800 roles worldwide, including a significant number in Washington. The cuts reached wider than many expected, and Microsoft has signaled that more changes are ahead, including the possibility of voluntary exit programs becoming a regular option. For many impacted employees, the separation is not immediate: we have heard from folks who have until early September to find another role internally before their termination takes effect.

For those impacted, it is important to review the specific details of your offer package. In the sections below, we cover what these changes and the current uncertainty mean for your financial plan, whether you have received notice, been offered a different role, or are simply watching it happen around you. If you have been impacted, check the specific dates in your package: many employees remain on payroll for a period after notice, and that window is the planning window.

What We’re Hearing From Those Impacted

Beyond the headlines, from the conversations we’ve had with those impacted, a few patterns are worth sharing:

The impacts are wider-ranging than expected. We’ve seen folks affected unexpectedly, including people whose roles and groups didn’t appear to be in the crosshairs. Don’t assume your team is immune, and don’t wait for a notice to start planning.

For some, a package can actually work in your favor. If you were already approaching a transition out of Microsoft, whether it was retirement or a career change, a severance package arriving near that transition can effectively fund the runway you were planning anyway. This is especially relevant if you weren’t eligible for the VRP earlier this year. Running the numbers before assuming a layoff is bad news.

Redeployment is the wildcard. We’ve seen some employees redeployed into different roles, often in different groups, and often not ideal fits. Accepting redeployment generally means no severance package, and whether declining one preserves a package depends on the specific terms, so get clarity from HR in writing before deciding. Map both paths: what the new role offers over time versus what a package would provide now. It’s a personal decision, but the financial math helps clarify it.

Understanding Your Separation Details and How They Fit Into Your Financial Plan

If you’ve been impacted, your separation agreement is the first document to understand. Packages in this round vary by level and tenure and typically include three components: a base severance payout, a period of continued RSU vesting, and a stretch of continued health coverage with COBRA options beyond it. Specific formulas have circulated in the press, but the only version that matters is yours. Read your agreement carefully and confirm the details with HR before making any decisions.

Each component answers a different planning question. The severance payout drives your cash flow timing and this year’s tax picture. Continued vesting shapes your income projection and your stock concentration decisions. And the health coverage period defines how long you have to build a bridge to your next plan.

If you’re unsure how to fit all the pieces together, work with a Certified Financial Planner who can help map this into your larger financial picture. Here is a template of the steps we suggest you take:

Step 1: Review Your Health Insurance and Medical Spending Options

Health insurance continuity is one of the most important pieces to address during a job transition. Recent Microsoft packages have included a period of employer-covered health coverage with COBRA options beyond it, though the devil is in the details. COBRA allows you to keep your current health plan, providing critical continuity of care for you and your family. Verify in your separation agreement exactly how many months are covered at no cost to you, and when the paid-by-you period begins.

Once that coverage ends, it’s important to have a continuity plan. Options to consider include:

• Joining your spouse’s employer plan, if available,
• Securing coverage through a new employer, or
• Exploring private insurance or ACA marketplace plans, which may offer subsidies based on your adjusted income.

Also, don’t overlook your Flexible Spending Account (FSA) if you’ve been contributing to one. FSAs are generally use-it-or-lose-it, and you may only have until your termination date (or COBRA election) to spend any remaining funds. Check your balance and spend down eligible medical expenses like prescriptions, contact lenses, or future appointments before that window closes.

Related: How to Navigate Early Retirement Health Insurance at Microsoft

Step 2: Bolster Your Emergency Fund and Leverage Your Vested Stock

Most people don’t have the kind of emergency reserve that can carry them through a 6 to 12 month job gap. Now is the time to target 6 months of essential expenses in a liquid, stable reserve.

Reviewing your vested RSUs and strategically selling certain lots is a great way to build this reserve. When RSUs vest, you’re taxed on them immediately, so the fair market value of the shares on vesting day becomes your cost basis. That means if you sell shortly after they vest, you may have little or no taxable gain, making this an efficient way to access liquidity.

With Microsoft stock trading well below its 2025 highs, this review matters more than ever. Some of your recently vested lots may even show a loss. Selling those shares can raise cash with no tax cost, and the loss may help offset other gains or income. Knowing what you own, lot by lot, helps you decide strategically what to sell and when.

One little-known rule: If you turn age 55 or older in the year you are laid off, you may be able to access your 401(k) penalty-free if you follow the proper steps. This can be an important backup option for liquidity, but be sure to consult a Certified Financial Planner to make sure you qualify and handle it correctly.

Keep your emergency reserve in a high-yield savings account, money market fund, or another liquid vehicle designed to preserve principal. A quality short-term bond fund can serve as a secondary reserve, but its value can fluctuate.

Step 3: Understand the 55 and 15 Rule, and How It Can Work for You

If you are turning 55 in the calendar year you separate from Microsoft and have achieved 15 consecutive years of full-time service, you may be eligible to continue receiving RSU vests even after your separation. We’ve seen this provision apply in past layoff scenarios and it can be a critical income stream during your transition.

It’s important to confirm your eligibility directly with Microsoft HR, as your personal tenure, start date, and service history will determine whether you qualify.

If you do qualify, eligible unvested RSUs may continue to vest on their regular schedule, even though you are no longer employed. This ongoing vesting can help provide a level of financial stability as you navigate next steps, or even bridge the gap to retirement or your next role.

Note the distinction: the continued vesting included in a severance package typically runs for a set period and then ends. The 55 and 15 rule, if you qualify, may keep eligible awards (generally those granted at least a year before your separation) vesting on their original schedule well beyond that. Confirm with Microsoft exactly which grants qualify, because the difference changes your income projection significantly.

Step 4: Prepare for a Potential High-Income Tax Year

If your role is impacted in 2026, it could turn out to be one of your highest-income years on record, especially if you’ve been at Microsoft for a long time. Between continued payroll during your notice period, severance payments, and continued RSU vesting (a set period under many packages, and potentially much longer under the 55 and 15 rule), many professionals may actually show more income this year than in a typical working year.

In addition, if you land a new job in the second half of the year or apply for unemployment benefits, you could further increase your taxable income. In Washington, severance generally does not reduce unemployment benefits, but the structure and timing of your payments matter. Regular benefits may be available for up to 26 weeks and are taxed as ordinary income. Review your eligibility directly with the Washington Employment Security Department.

If 2026 ends up being a high-income year for you, now is the time to look at strategies that can reduce your tax burden while strengthening your financial picture, as well as planning for estimated tax payments to avoid penalties.

Contact our office to review your income projection and identify tax planning strategies that best align with your goals.

Step 5: Manage Your Microsoft Stock Concentration Risk

For most Microsoft professionals, concentrated exposure to Microsoft stock remains the biggest financial risk. We have found many Microsoft professionals have more than half of their investments held in Microsoft stock. Over the past nine months, that risk has stopped being theoretical: Microsoft stock has declined roughly 30% from its highs, even as the broader need for income and stability has grown for those facing a job transition.

If that decline has you feeling stuck, you’re not alone, but an all-or-nothing decision is rarely the right answer. A disciplined plan matters more than perfect timing. Strategies to consider include:

• Harvesting tax lots that now show losses: shares that vested at higher prices may be sold to raise cash while capturing a deductible loss (coordinate sales around upcoming RSU vests and ESPP purchases to avoid wash-sale complications),
• Selling newly vested RSUs (already taxed as income) to avoid building the position back up,
• Reallocating your 401(k) to reduce company stock exposure without triggering taxes,
• Consider establishing a collar hedge if you’re not ready to sell but want to protect downside.

We help clients analyze their total Microsoft exposure and create a personalized plan to bring it in line with their goals, income needs, and risk tolerance, without letting a down market force rushed decisions.

Related: How Much Microsoft Stock Is Too Much?

If You Weren’t Eligible for the VRP, Passed on It, or Wonder If You’re Next

Microsoft is not the same company it was five years ago, and it has been clear that more changes are ahead, including the possibility of voluntary exit programs becoming a recurring option. Whatever your level or tenure, this is a critical time to build financial resiliency and be ready for the unknown. If you weren’t eligible for this year’s VRP, passed on it, or worry the next round of cuts could reach your team, the best response isn’t anxiety. It’s readiness.

The same steps above apply, just without the deadline: build the emergency reserve, address your stock concentration, understand your severance and benefits landscape, and know your real retirement number. When you’re financially fit, a future package or layoff becomes an option you evaluate from strength, not a crisis you react to. We’ll be sharing more on exactly this topic in the weeks ahead.

Now is the Time to Reassess Your Financial Plan

A job loss is one of the biggest financial turning points a person can face, and that makes this an important time to revisit (or create) your financial plan. Especially for those nearing retirement, or if you’ve been considering a change anyway, this transition may also create an opportunity to reevaluate your goals and end up in a better place.

From cash flow and taxes to healthcare and investing, updating your financial game plan can give you the confidence and structure needed to move forward wisely.

Schedule a no-cost session with one of our Certified Financial Planners to review your full situation. Even if you’re already working with an advisor, this can provide an outside perspective and help confirm your plan accounts for the timing of your severance, benefits, taxes, and stock awards.

team@stablerwm.com | (425) 646-6327

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No strategy assures success or protects against loss. Stabler Wealth Management and LPL Financial are not affiliated with or endorsed by Microsoft.

Securities and Advisory services are offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Stabler Wealth Management is not registered as a broker-dealer or investment advisor.