Severance Pay Calculator
Estimate severance pay from years of service and base salary.
Covers one week per year, two weeks per year, and custom multipliers with a gross payout summary.
Severance pay is compensation given to employees when they are laid off or terminated. There is no universal legal requirement for it in the United States. What you get comes from company policy, your employment contract, and occasionally state law, which is precisely why the offer on the table is usually negotiable.
The Formula:
Severance = (Annual Salary / 52) × Weeks per Year × Years of Service
Where:
- Annual Salary = your gross yearly salary before taxes
- Weeks per Year = the number of weeks of pay offered for each year you worked (typically 1-4 weeks)
- Years of Service = how long you worked at the company
Common severance formulas by generosity:
| Type | Rate | Typical Employer |
|---|---|---|
| Minimum | 1 week per year | Small companies |
| Standard | 2 weeks per year | Most mid-size and large companies |
| Generous | 3-4 weeks per year | Tech companies, financial firms |
| Executive | Individually negotiated | Senior leadership |
Practical Example: An employee with an $80,000 salary and 5 years of service at the standard rate of 2 weeks per year: Weekly pay = $80,000 / 52 = $1,538.46 Total weeks = 5 x 2 = 10 weeks Severance = 10 x $1,538.46 = $15,384.62 Ten weeks is about 2.3 months of pay. After the flat 22% federal withholding on supplemental wages, roughly $12,000 actually reaches the bank, before state tax.
What else may be included in a severance package:
- Continuation of health insurance (COBRA coverage paid by employer)
- Payout of unused vacation or PTO days
- Outplacement services (help finding a new job)
- Extended vesting of stock options
Important tax and legal notes:
- Severance pay is taxable as ordinary income in the US
- Some employers let you take severance as a lump sum or spread it over time, and the tax impact differs
- You may be asked to sign a release of claims in exchange for the severance
- Always review severance agreements carefully and consider consulting an employment attorney before signing
If you are 40 or over, you get time. The Older Workers Benefit Protection Act requires employers to give you 21 days to consider a release of age-discrimination claims, and 7 days to revoke it after signing. In a group layoff that consideration period rises to 45 days. An employer pressing you to sign on the spot is not allowed to shorten those windows, and a release that ignores them may not be enforceable.
Severance is not WARN pay. The Worker Adjustment and Retraining Notification Act requires 60 days advance notice of a mass layoff at employers with 100 or more staff. If notice was not given, the money covering that period is owed regardless of any severance package. Some employers present it as generosity. It is not, and accepting it as severance should not cost you the notice pay.
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This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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