About the Severance Pay Calculator
This severance pay calculator estimates what a layoff package could be worth. Most companies use a formula of a set number of weeks of pay for each year of service, often with a minimum and a maximum. Enter your salary, tenure and your employer’s formula to see the severance amount, then add unused PTO and any employer-paid health coverage to get the full package.
It is useful if you have just been told about a layoff and want to check an offer, if you are negotiating a separation agreement, or if you are planning how long your savings plus severance will last. The by-tenure table shows how the package grows with each extra year, which can matter if you are close to an anniversary.
In the US, severance is not required by federal law; it is set by company policy, contract or negotiation, and two weeks per year of service is a common benchmark. Severance and PTO payouts are taxed as supplemental wages, so the calculator estimates withholding at a single rate you choose. The 30% default is the 22% optional flat federal rate from IRS Publication 15 (2026) plus 7.65% FICA, before state tax; Social Security (6.2%) stops once your 2026 wages pass $184,500, and supplemental wages above $1 million are withheld at 37%, so adjust the rate if either applies.
With the default inputs, the severance pay (gross) is $20,769.23. Change any value above to recalculate instantly.
How to use the severance pay calculator
- 1Enter your annual base salary and years of service.
- 2Enter your employer’s formula: weeks per year, minimum and maximum.
- 3Add unused PTO days and any months of health premiums the employer will pay.
- 4Set an estimated withholding rate for your situation.
- 5Review severance, the full package and the cash you will receive after withholding.
Formula and method
Severance weeks are years of service multiplied by the weeks-per-year formula, raised to the plan minimum and limited to the maximum (if there is one). Weekly pay is annual base salary ÷ 52, so severance is weeks × weekly pay. Partial years count proportionally.
Unused PTO is valued at a daily rate of salary ÷ 260 working days. Employer-paid health coverage (for example COBRA premiums) is months × monthly premium; it is shown as package value but not taxed as cash here. Tax is an estimate of withholding on the cash portion; your final tax depends on your total income for the year.
- Years
- Completed years of service (decimals allowed)
- Weeks per year
- Weeks of pay per year of service in the plan
- Days
- Unused PTO days that will be paid out
Worked examples
$90,000 salary, 6 years, 2 weeks per year
Six years × 2 weeks = 12 weeks at $1,730.77 a week, or $20,769.23. Eight unused PTO days at $346.15 a day adds $2,769.23 and three months of $650 premiums adds $1,950, for a $25,488.46 package. After 30% withholding on the cash, you receive about $16,476.92.
Long tenure hitting the 26-week cap
Eighteen years × 2 weeks would be 36 weeks, but the plan caps severance at 26 weeks. At $2,307.69 a week that is $60,000 — exactly six months of salary.
Short tenure with a 4-week minimum
One year at one week per year would give just 1 week, so the 4-week minimum applies: 4 × $1,250 = $5,000. Three PTO days add $750, and after 30% withholding about $4,025 lands in your account.
Frequently asked questions
How much severance is typical?+
In the US a common benchmark is one to two weeks of pay per year of service, often with a minimum of 2–4 weeks and a cap around 26 weeks. Senior staff and executives frequently negotiate more, and contracts or collective agreements can set their own terms.
Is severance pay required by law?+
Not under US federal law. The Fair Labor Standards Act does not require severance; it is a matter of agreement between employer and employee. Other countries, such as Canada and much of Europe, do set statutory notice or redundancy pay.
How is severance pay taxed?+
Severance is taxable wages. Employers usually withhold federal tax at the 22% supplemental rate (37% above $1 million) plus Social Security and Medicare, and state tax where it applies. Your actual tax is settled when you file your return.
Can I negotiate a severance package?+
Often yes, especially if you are asked to sign a release of claims. People commonly negotiate extra weeks of pay, longer health coverage, a pro-rated bonus, accelerated vesting, outplacement support or a neutral reference.
Does severance affect unemployment benefits?+
It can. Some states reduce or delay unemployment benefits while you receive severance, especially if it is paid as salary continuation. Check your state’s workforce agency rules before choosing a lump sum or continuation.
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.