Severance Pay Calculator
Estimate your severance payout from your salary and years of service, using the two most common formulas or a custom rate. Free, private, no sign-up.
Severance is not legally required in most US states or under federal law — it is offered at employer discretion, by company policy, or per an employment contract or WARN Act obligation for qualifying layoffs. These are gross, pre-tax estimates for planning purposes, not a guarantee of what any employer will offer.
Common Severance Formulas
A common baseline, especially at smaller companies or for shorter tenures. 5 years of service = 5 weeks of pay.
A more generous standard often seen at larger companies and in more senior roles. 5 years of service = 10 weeks of pay.
Some employers use a different multiplier, or a hybrid (e.g., a flat amount plus a per-year multiplier). Enter the exact rate your employer or offer letter specifies.
How Severance Pay Is Calculated: A Worked Example
Say you earn $78,000 a year, worked at the company for 6 years, and your employer pays 2 weeks per year of service:
Annual salary ÷ 52. On a $78,000 salary: $78,000 ÷ 52 = $1,500 per week.
At 2 weeks per year of service with 6 years of tenure: 2 × 6 = 12 weeks.
$1,500 × 12 weeks = $18,000 gross severance, before taxes and deductions.
Severance agreements often also include accrued PTO payout, COBRA health coverage subsidies, or extended vesting — these are separate from the weekly-pay formula and worth checking line by line.
Negotiating the package? Our salary negotiation email generator helps you draft the counter, and the job offer comparison calculator helps you weigh what comes next.
Severance Pay FAQ
How is severance pay calculated?
The standard formula is: (annual salary ÷ 52) × weeks per year of service × years of service. Most US employers pay 1–2 weeks of pay per year worked. For example, 6 years at $78,000 with a 2-week rate is $1,500 × 12 = $18,000 gross. Company policy or your employment agreement may set a different rate, a flat amount, or caps.
Is severance pay guaranteed by law?
In most of the US, no — severance is not federally mandated. It exists at employer discretion, through a written policy, an employment contract, or a union agreement. One exception: the WARN Act requires 60 days' notice (or pay in lieu) for qualifying mass layoffs at larger employers — check if your layoff meets those thresholds.
What is a typical severance package?
One to two weeks of pay per year of service is common in the US, though packages vary widely by company size, seniority, and industry. Executives often negotiate more; some companies offer a flat number of weeks regardless of tenure.
Is severance pay taxed?
Yes — severance is taxable income, typically subject to the same federal and state withholding as regular wages (and sometimes withheld at a flat supplemental rate). This calculator shows gross, pre-tax amounts.
Can I negotiate my severance offer?
Often, yes — especially for longer tenure or senior roles. Common asks include extended health insurance (COBRA) coverage, extra weeks of pay, accelerated vesting, or a neutral reference agreement. Read any severance agreement carefully before signing, particularly clauses about waiving legal claims.
Does severance pay work differently in California or other states?
No US state requires severance pay — the formula is set by your employer everywhere. What differs by state is what surrounds it: California requires immediate payout of final wages and accrued PTO regardless of severance, some states (like New Jersey) have their own mini-WARN laws with pay-in-lieu requirements for mass layoffs, and state taxes on the payout vary. Check your state's labor department rules alongside the agreement.
Does severance affect unemployment benefits?
It depends on your state and how the severance is paid. In many states a lump-sum severance doesn't delay unemployment benefits, while salary-continuation payments can postpone eligibility until they end. Report severance when you file — misreporting can trigger repayment demands later.
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