Severance Pay Calculator
Estimate your severance package based on tenure, salary, and your employer's typical severance formula.
⚠️ This is a rough educational estimate only, not legal or financial advice. Severance is not legally required in most cases and actual amounts depend entirely on your employer's policy, your contract, and state law.
How is severance pay usually calculated?
Severance pay is not required by federal law in most circumstances — it is typically offered at an employer's discretion, based on internal policy, an employment contract, or a negotiated separation agreement. When employers do offer severance, the most common formula is a set number of weeks of pay for every year worked, commonly one to two weeks per year of service, sometimes combined with a flat "base" amount everyone receives regardless of tenure. A worker with 5 years of service at a company offering 2 weeks per year, for instance, would typically be offered around 10 weeks of pay, often plus a small base amount.
Why severance policies vary so widely
Unlike a wage or a tax bracket, severance has no single standard formula — it depends entirely on your employer's internal policy, your role and seniority, whether you're covered by a union contract or executive agreement, and sometimes state-specific mass-layoff notification laws (such as the WARN Act, which can require pay in lieu of notice for larger layoffs). Some employers add extra weeks for specific job levels, cap total severance at a maximum number of weeks, or negotiate individually during layoff events, which is why the "weeks per year of service" input in this calculator is fully editable.
What to check before relying on an estimate
If you're facing a layoff, check your employee handbook, offer letter, or any signed severance agreement for the actual formula your employer uses, and consider whether accrued PTO, COBRA subsidies, or outplacement services are included separately from the cash severance. This calculator provides an illustrative, educational estimate only — it is not legal or financial advice, and your actual severance offer may differ significantly. Consult an employment attorney before signing any severance or separation agreement, especially if it asks you to waive legal claims.
Frequently Asked Questions
Is severance pay required by law?
In most cases, no. Severance is typically offered at an employer's discretion or per a contract, not a general legal requirement, though certain situations — like large layoffs under the WARN Act, or specific state or contractual obligations — can require pay in lieu of notice.
What is a typical severance pay formula?
A common approach is one to two weeks of pay for every year of service, sometimes with a flat base amount added regardless of tenure. However, this varies enormously by employer, industry, and seniority level, so check your specific company policy or offer letter.
Is severance pay taxable?
Yes, severance pay is generally treated as taxable income subject to federal and state income tax and payroll taxes, similar to regular wages. The amount you actually take home will be lower than the gross lump sum shown by an estimate like this one.
Can I receive severance pay and unemployment benefits at the same time?
It depends on your state. Some states delay or reduce unemployment benefits while you're receiving severance, especially if it's paid as a continuation of salary rather than a lump sum, while others allow both. Check with your state's unemployment office for your specific rules.
Can I negotiate my severance package?
Often, yes, particularly for longer-tenured or senior employees. Common negotiation points include additional weeks of pay, extended health insurance (COBRA) subsidies, accelerated vesting, or outplacement services. An employment attorney can help you understand your leverage before you sign anything.
Should I sign a severance agreement right away?
Not without reading it carefully. Severance agreements often ask you to waive certain legal claims against your employer in exchange for the payment. Most employers are required to give you a review period, and it's wise to have an employment attorney review the terms before signing.
Does severance include health insurance or other benefits?
Sometimes. Some employers include a period of continued health coverage or a COBRA premium subsidy as part of the severance package, separate from the cash lump sum. This calculator only estimates the cash severance amount, not the value of any additional benefits.
How accurate is this severance pay estimate?
This is a rough, educational estimate only, not legal or financial advice. Actual severance depends entirely on your employer's specific policy, your contract, your state's laws, and any individual negotiation. Review your own offer letter or employee handbook, and consult an employment attorney for guidance specific to your situation.