Severance Pay Calculator
Calculate your expected severance package with this comprehensive severance pay calculator. Determine gross and net severance pay based on your years of service, annual salary, and company severance policy. The calculator accounts for common formulas like weeks per year of service, minimum and maximum caps, prorated bonuses, and unused vacation payout. Get tax estimates to understand your actual take-home amount. Whether you're negotiating a severance agreement or planning financially after a layoff, this tool helps you understand exactly what to expect. Perfect for employees facing termination and HR professionals structuring severance offers.
Your current annual gross salary
Total time employed at company
Company policy: weeks of severance per year of service
Minimum severance regardless of tenure
Maximum severance cap (0 = no cap)
Only if bonus is included in severance
Accrued vacation to be paid out
Federal + state tax rate for estimate
What is severance pay?
Severance pay is compensation employers offer to employees upon termination, typically during layoffs or restructuring. It's not legally required in most cases (except for WARN Act mass layoffs), but many companies provide it as goodwill, to comply with employment contracts, or to have employees sign release agreements waiving legal claims. Severance helps bridge the financial gap while seeking new employment.
How is severance pay calculated?
Common formula: 1-2 weeks of pay per year of service. For example, 5 years employed at 2 weeks/year = 10 weeks severance. Calculations vary: some companies offer flat amounts (e.g., 4 weeks for everyone), others base it on position level, with executives receiving 6-12+ months. Many companies set minimums (e.g., 4 weeks minimum) and caps (e.g., 26 weeks maximum).
Is severance pay taxed?
Yes, severance is taxable income subject to federal, state, and FICA taxes (Social Security and Medicare). Employers often withhold at supplemental wage rates (22% federal, or your regular rate if higher). Since it's a lump sum, you may be pushed into a higher tax bracket for that year. The IRS considers severance as wages, not a gift. Plan for 25-35% total withholding.
What is a typical severance package?
Industry standards: Entry-level: 1-2 weeks per year of service (4-8 weeks minimum), Mid-level: 2 weeks per year (8-12 weeks minimum), Senior: 2-4 weeks per year (12-26 weeks), Executives: 6-12 months or more. Packages may include: continued health insurance (COBRA subsidy), outplacement services, laptop/phone, prorated bonus, and stock vesting acceleration. Large companies tend to have formal policies.
Do I have to sign a release to get severance?
Usually, yes. Employers offering severance typically require signing a "release and waiver" agreement where you waive the right to sue for wrongful termination, discrimination, or other claims. You typically get 21 days to consider (45 days for group layoffs over age 40) and 7 days to revoke after signing. If you have potential legal claims, consult an employment attorney before signing.
Can I negotiate my severance package?
Yes! Severance is often negotiable, especially for senior positions. Negotiate: more weeks of pay, extended health benefits, neutral reference letter, outplacement services, vesting of unvested stock, laptop/equipment, non-compete waiver. Time it right - negotiate before signing the release. Lower-level positions have less flexibility, but it never hurts to ask professionally, especially if you have leverage (e.g., questionable termination circumstances).
Does severance affect unemployment benefits?
It depends on your state and how severance is structured. Some states delay unemployment until severance "period" ends (if you get 10 weeks severance, unemployment starts week 11). Other states allow concurrent receipt. Lump sum payments often don't delay benefits, but ongoing salary continuation does. Vacation payout typically doesn't affect unemployment. Always file for unemployment immediately - the state will determine eligibility.
What is included in a severance package besides pay?
Comprehensive packages include: Severance pay (base), Health insurance continuation (COBRA subsidy for 3-6 months), Prorated annual bonus, Unused vacation/PTO payout, Outplacement services (resume help, job coaching), Extended vesting of stock options, Laptop/phone to keep, Positive reference letter, Non-compete waiver, and Career counseling. Executives often get office space, administrative support, and longer health coverage.
Are vacation days included in severance?
Vacation payout is separate from severance in most cases. Many states (California, Montana, etc.) require employers to pay out all accrued, unused vacation regardless of severance. This is paid at your regular rate. Some severance packages explicitly include vacation payout in the total, while others pay it separately. Unused sick time typically isn't paid out unless company policy or state law requires it.
What is the WARN Act and how does it affect severance?
The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100+ employees to give 60 days notice before mass layoffs (50+ employees) or plant closures. If they don't, they must pay 60 days wages as severance. This is the minimum - companies often provide more. WARN applies to full-time workers who've been employed 6+ months. State versions (like California) have stricter requirements.
Can I receive severance if I'm fired for cause?
Typically no. Severance is usually only for "no fault" terminations like layoffs, restructuring, or position elimination. Termination "for cause" (theft, violence, gross misconduct, repeated policy violations) generally disqualifies you from severance. However, "performance" terminations exist in a gray area - if you weren't meeting expectations but didn't commit misconduct, severance may still be offered, especially to avoid wrongful termination claims.
How long does severance pay last?
Severance is typically paid as a lump sum within 1-2 pay periods after termination, though some companies structure it as "salary continuation" over the severance period (e.g., 12 weeks paid biweekly). Lump sum is better for most people - you get money immediately and can file for unemployment. Salary continuation may maintain health benefits during that period without COBRA, but delays unemployment in some states. Check your offer carefully.