Severance Pay Calculator
Severance Pay Calculator
Rules vary by state; results are estimates. Consult your employer or state labor department.
Per Year of Service
$1,000.00
Total Severance Package
$5,000.00
Common Formulas
- 1x formula: Most common, 1 week pay per year
- 2x formula: More generous, often for management
- Varies: Check your employment agreement
Disclaimer
Results are estimates based on the formula you select. Actual severance depends on your employment contract, company policy, state law, and negotiation. Severance is not required by federal law unless your contract or the WARN Act specifies it. Consult an employment attorney before signing any separation agreement.
How to use a severance estimate
Severance calculations usually start with a formula, but the final package depends on the document you are asked to sign. Before treating an estimate as complete, compare it with your offer letter, employment agreement, employee handbook, separation agreement, bonus plan, commission plan, equity documents, and any written layoff or WARN notice.
Also check whether the number shown is gross or net. Severance is commonly treated like wages for tax withholding, so the amount deposited may be lower than the gross package. Health coverage, outplacement support, unused PTO, release language, non-disparagement clauses, and rehire eligibility can also affect the practical value of the offer.
Questions to ask before signing
- Is the payment based on weekly pay, salary, tenure, or a negotiated flat amount?
- Does the offer include unused PTO, bonuses, commissions, equity, or benefits continuation?
- Is there a release of claims, confidentiality clause, or deadline to respond?
- Would state law, a contract, union agreement, or WARN Act notice change the package?
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Frequently Asked Questions
Is severance pay required by law?
Not under federal law. Severance is required only if your employment contract, employee handbook, or the WARN Act mandates it. Most severance is discretionary and negotiable.
What is the most common severance formula?
One week of pay per year of service is the most common formula for hourly and salaried employees. Management and senior roles often use two weeks per year or one month per year formulas.
How is severance taxed?
Severance is treated as ordinary income — the same as wages. Federal income tax, Social Security, and Medicare are all withheld. Your effective tax rate depends on your total income for the year.
Can I negotiate my severance package?
Yes — most packages are negotiable. Beyond the base cash amount, consider asking for an extended healthcare subsidy, vesting acceleration, outplacement services, or a positive written reference as part of the package.