Severance Pay Calculator

Calculate your layoff severance package based on years of service, salary, and company policy. Estimate lump-sum tax withholding and healthcare continuation value.

Severance Package Inputs

$
yrs
wks
wks
days
mos
$
Total Gross Package Value
$22,719Gross value

Net Take-Home Cash: $13,573 (after ~34.65% est. taxes)

10 Weeks Severance

Net Cash Lump Sum

$13,573

After tax withholding

Base Severance

$17,308

10 wks tenure pay

PTO Payout

$3,462

10 accrued days

COBRA Health Value

$1,950

3 mos subsidy

Severance Package Financial Breakdown

Base Salary Severance (10 weeks @ $1,731/wk)$17,308
Earned Unused PTO Payout (10 days @ $346/day)+$3,462
Employer-Subsidized COBRA Health Coverage (3 mos)+$1,950
Est. Supplemental Tax Withholding (~34.65% Fed/FICA/State)-$7,197
Net Cash Check Handed to You$13,573
Legal Rights & Negotiation Advisory

Remember that severance agreements are bilateral legal releases. If you are 40 or older, federal OWBPA regulations mandate that you receive at least 21 days to review the agreement (45 days in group layoffs) plus a 7-day revocation window after signing. Consult an employment attorney before signing if you suspect wrongful termination or retaliation.

Severance Package Calculation Formulas
Effective Duration
Weeks = max(Tenure × Wk/Yr, Floor)
Base Severance Pay
Base Pay = Weeks × (Salary ÷ 52)
Total Package Value
Total = Base + PTO + COBRA
Step-by-Step Calculation Breakdown
Example: $90,000 Salary, 5 Years Tenure, 2 Weeks/Yr, 10 PTO Days, 3 Mos COBRA ($650/mo)
1. Weekly Rate: $90,000 ÷ 52 = $1,730.77 / week
2. Base Severance Weeks: 5 years × 2 weeks = 10 weeks
3. Base Severance Pay: 10 weeks × $1,730.77 = $17,308
4. PTO Payout: 10 days × ($90,000 ÷ 260) = $3,462
5. COBRA Healthcare Value: 3 months × $650 = $1,950
6. Gross Cash Severance: $17,308 + $3,462 = $20,769
7. Est. Supplemental Tax Withholding (~34.65%): -$7,197
Net Take-Home Cash:$13,573 Net Lump Sum (Total Package Value: $22,719)

Severance Pay Standards by Job Seniority

Job Level / SeniorityWeeks per Year of ServiceTypical Minimum FloorAverage Package Ceiling
Entry to Mid-Level Individual Contributor1.0 – 1.5 Weeks2 – 4 Weeks16 – 26 Weeks
Senior Professional / Lead Engineer1.5 – 2.0 Weeks4 – 8 Weeks26 – 39 Weeks
Director / Department Manager2.0 – 3.0 Weeks8 – 12 Weeks39 – 52 Weeks
Executive / VP / C-Suite1 Month per Year26 – 52 Weeks52 – 104 Weeks (1–2 Years)

Top Items to Negotiate in a Severance Agreement

  • Additional Severance Weeks: Request an extra 2–4 weeks of salary bridge, especially if your termination occurs near bonus distribution cycles.
  • Accelerated Equity Vesting: Ask for your upcoming RSU or stock option vesting tranche to accelerate or vest pro-rata.
  • Extended COBRA Healthcare Coverage: Request 3 to 6 months of 100% employer-subsidized health benefits.
  • Pro-Rated Annual Performance Bonus: If you worked most of the fiscal year prior to the layoff, request your pro-rated earned bonus.
  • Neutral Reference & Mutual Non-Disparagement: Ensure the agreement explicitly states your departure was due to a company restructuring and includes mutual non-disparagement protection.

Frequently Asked Questions

How is severance pay typically calculated in the United States?
While US federal law does not mandate severance pay, most corporate severance policies award between 1 to 2 weeks of regular base pay per full year of completed service (with senior executives often receiving 3 to 4 weeks per year or 1 month per year). Common packages also include minimum baseline floors (e.g. 4 to 8 weeks minimum regardless of tenure), payout of accrued unused PTO, and employer-subsidized COBRA health insurance continuation.
How is severance pay taxed when paid out as a lump sum?
The IRS classifies severance pay as supplemental wage income. When paid as a single lump sum, it is subject to mandatory federal supplemental withholding of 22% (or 37% for amounts exceeding $1 million), plus 6.2% Social Security (up to the annual wage ceiling), 1.45% Medicare, and applicable state and local income taxes. Overall, expect roughly 30% to 40% of your gross severance check to be withheld for taxes.
What is the federal WARN Act and does it guarantee severance?
The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100 or more full-time employees to provide at least 60 calendar days written advance notice before a plant closing or mass layoff (affecting 50+ workers). If an employer fails to provide 60 days advance notice, they are legally required to pay full wages and benefits for the unfulfilled notice period, which is distinct from discretionary severance packages.
What rights do employees over age 40 have regarding severance agreements?
Under the Older Workers Benefit Protection Act (OWBPA), an amendment to the ADEA, employees aged 40 and older must be given at least 21 days to review and consider a severance release agreement (or 45 days if part of a group layoff), and a mandatory 7-day post-signature revocation period during which they can cancel the signed agreement.
Can you negotiate a severance package offer?
Yes. Severance packages are legal contracts in exchange for signing a waiver of liability. You can negotiate key terms including: additional weeks of severance, extending employer-paid health insurance (COBRA), pro-rated annual bonus payout, accelerated vesting of RSUs and stock options, keeping your company laptop, and mutual non-disparagement agreements.
Does receiving severance affect unemployment insurance benefits?
It depends on your state. Some states (like California) allow you to collect unemployment immediately even while receiving lump-sum severance, whereas other states (like New York, Texas, and Illinois) may delay unemployment benefit start dates if severance exceeds statutory weekly wage thresholds or is paid out as salary continuation.
Is payout of accrued unused PTO required by law?
Roughly half of US states (including California, Illinois, Massachusetts, New York, and Colorado) legally require employers to pay out 100% of earned, unused vacation and PTO time upon termination as earned wages. In other states, PTO payout is governed by company employee handbook policy.

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