Severance Pay Calculator (US)
Use this severance pay calculator to estimate a US severance package based on your salary, years of service and your employer's weeks-per-year policy. It shows the gross lump sum, estimated tax withheld, and your approximate take-home amount.
⚠️ Estimate only — see the disclaimer.
Last updated:
Estimate your severance
Enter your details and select Calculate to see your estimated package.
What this calculator does
Because the US has no statutory severance formula, the size of a package depends almost entirely on your employer's policy and what you can negotiate. This calculator turns the most common rule of thumb — a set number of weeks' pay per year of service — into a concrete number, then estimates the tax so you can see what actually lands in your bank account.
It's useful when you're reviewing a separation agreement, planning your finances after a layoff, or preparing to negotiate. Enter your real numbers, or adjust the weeks-per-year to compare a 1-week policy against a 2-week policy.
How to use this calculator
- Enter your annual salary. The tool converts it to weekly pay (÷ 52).
- Enter your years of service — decimals are fine (e.g. 6.5).
- Enter the weeks of pay per year your employer offers (commonly 1 or 2).
- Optionally set a maximum weeks cap if your policy limits the total.
- Adjust the tax withholding if needed, then select Calculate.
Formula and method
Weekly pay = Annual salary ÷ 52 Weeks of pay = Weeks-per-year × Years of service (capped if set) Gross severance = Weekly pay × Weeks of pay Estimated tax = Gross severance × Withholding % Take-home = Gross severance − Estimated tax
This mirrors how most US employers structure severance. Some use base salary only; others include bonuses or commissions in “weekly pay,” which would raise the result.
Example calculation
An employee earning $78,000 a year with 6 years of service under a 2-week policy:
- Weekly pay = $78,000 ÷ 52 = $1,500.
- Weeks = 2 × 6 = 12 weeks.
- Gross severance = $1,500 × 12 = $18,000.
- At 22% withholding, take-home ≈ $14,040 — about 2.8 months of pay.
Typical severance policies
| Policy | Weeks per year | Common cap |
|---|---|---|
| Standard | 1 week | 12–26 weeks |
| Generous | 2 weeks | 26–52 weeks |
| Executive | 2–4 weeks (or flat months) | Negotiated |
These are typical ranges, not guarantees. Your offer depends on company policy, your contract and negotiation.
Common mistakes to avoid
- Assuming severance is guaranteed. It isn't required by federal law — check your contract or handbook.
- Confusing gross with net. Taxes and FICA reduce a lump sum noticeably.
- Overlooking benefits. Health insurance (COBRA), unused PTO and stock vesting can be worth more than extra weeks.
- Signing immediately. Many releases give you time to review (and, over 40, a revocation window) — use it.
- Forgetting unemployment rules. Severance may delay benefits in some states.
Limitations of this calculator
- This is an estimate based on a weeks-per-year policy; your actual offer may differ.
- Withholding is approximate — your final tax depends on your total annual income.
- It does not value benefits, bonuses, equity or accrued PTO.
- For UK or Canadian entitlements, use the UK redundancy or Canada severance calculators, which follow statutory rules.
Frequently asked questions
How is severance pay calculated in the US?
There is no single legal formula. Most US employers use a policy of one to two weeks of pay for each year of service, sometimes with a minimum and a maximum cap. Severance can also be a flat number of weeks or a negotiated figure. This calculator multiplies your weekly pay by the weeks-per-year you enter and your years of service.
Is severance pay required by law?
No. Under federal law, severance pay is a matter of agreement between employer and employee — the Fair Labor Standards Act does not require it. You may be entitled to it through a written contract, an employee handbook, a union agreement, or company practice.
How is severance pay taxed?
Severance is treated as supplemental wages and is subject to federal income tax, Social Security and Medicare. Employers commonly withhold federal income tax at the 22% flat supplemental rate on lump sums (37% on amounts over $1 million). Your actual tax is settled when you file your return.
Does severance affect unemployment benefits?
It can. Some states reduce or delay unemployment benefits while you are receiving severance, while others do not count it. Check your state's unemployment agency rules.
Should I take a lump sum or salary continuation?
A lump sum gives you the full amount immediately; salary continuation spreads payments and may keep benefits like health insurance active longer. The tax total is similar, but timing, benefits and unemployment eligibility can differ — weigh those before signing.
Can I negotiate severance?
Often, yes — especially for longer tenure, senior roles, or when signing a release of claims. Common negotiation points include more weeks of pay, extended health coverage (COBRA), a positive reference, and outplacement support.
Disclaimer
This calculator provides general estimates for informational purposes only and is not a substitute for professional tax, legal, accounting or financial advice. Rules, rates and thresholds change frequently and vary by individual circumstances. Always confirm figures with the relevant authority or a qualified professional before acting.
Sources & references:US Department of Labor — Severance Pay · IRS — Supplemental wages withholding