Golden Handshake Tax Calculator 2026
A golden handshake is an enhanced severance package for an executive retiring or being separated. Components typically include lump-sum severance (1-3 years salary), equity acceleration, and pension top-up. Federal and state tax often consumes 40-50% — the package value pre-tax is meaningless without after-tax analysis.
Standard Golden Handshake Components
Cash severance: 1-3 years base salary (top quartile execs get 3 years + pro-rata bonus). Equity acceleration: typically 100% of RSUs/options, sometimes performance-based vesting at target. Pension top-up: SERP cash-out or 5-year contribution credit. Outplacement services: $25-100K. Healthcare continuation: 18-36 months COBRA + executive supplement.
Section 280G Excess Parachute Tax
Triggered when total payments contingent on Change in Control exceed 3x base salary + 5-year average bonus. Excess over 1x base+bonus is subject to 20% excise tax on top of regular tax — total effective rate can exceed 70%. Pre-negotiate gross-up or modified single-trigger to avoid. Many post-Dodd-Frank companies removed 280G gross-ups.
How To Optimize After-Tax Recovery
Three plays: (1) Spread severance over 24-36 months instead of lump-sum to fall into lower brackets. (2) Use Section 83(b)-style strategies on acceleration when possible. (3) State residency change can save 5-13% — establish domicile in NV/TX/FL/WA before lump-sum payment hits. Document residency change with multiple state ties (driver's license, voter registration, home, time).
Source: IRC Section 280G (parachute payments), IRS Publication 5528 (Equity Compensation), 2025 PwC Executive Compensation Survey. Last updated: May 2026.