Severance Pay Calculator
Severance Pay Calculator
Estimate a severance package and its after-tax value.
Estimate a severance package and its after-tax value.
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Professional Financial Tools
8/25/2026
Include partial years as a decimal — 7 years 6 months is 7.5.
One to two weeks per year is the common US norm. Check your offer letter or company policy — there is no federal law requiring severance.
Many policies cap total severance (e.g. 26 or 52 weeks). Leave at 0 for no cap.
Unused PTO payout, prorated bonus, or a negotiated add-on.
Used to show how many months the after-tax payout actually covers.
15.0 weeks of pay at $1,538 per week.
Severance is a supplemental wage: federal withholding is a flat 22% under $1,000,000 (IRS Pub 15), not your usual payroll rate. FICA and state tax still apply. Effective rate here: 34.7%.
This is your realistic job-search runway from the severance alone, before unemployment benefits or savings.
Free financial calculators, verified against primary sources like the IRS, CFPB and Federal Reserve. No sign-up, and every calculation runs entirely in your browser — nothing you type is ever sent to us.
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Open calculatorThe single most common mistake people make estimating a severance package: assuming it's withheld the same way as their normal salary. It isn't. The IRS treats severance as a supplemental wage, which means a different, flat withholding rate applies — and that rate is often higher than your actual marginal tax bracket, so the check you receive can look smaller than expected even though you may get some of it back at tax time.
This calculator turns a severance offer — weeks per year of service, plus any lump-sum add-ons — into three numbers that actually matter: the gross payout, the realistic after-tax amount, and how many months of expenses that covers.
Everything runs in your browser. Nothing you type is sent to a server, and there is no signup.
Under IRS Publication 15, employers generally withhold federal tax on supplemental wages at a flat 22% for the portion under $1,000,000, and 37% on anything above that in the same calendar year — regardless of what bracket your regular salary puts you in. FICA still applies in full: Social Security up to the annual wage base, Medicare with no cap.
Worked example, matching this calculator's defaults — $80,000 salary, 7.5 years of service, 2 weeks per year of service, no cap, 5% state rate:
That withholding is not necessarily your final tax bill — it's reconciled against your actual annual income when you file, and if your true marginal rate is below 22% you'll typically get some of it back as a refund. But the check that lands in your account reflects the flat rate, not your regular one.
The more useful question after a layoff usually isn't "how much severance did I get" but "how long does this buy me." The calculator divides your net (after-tax) payout by your monthly living expenses:
At the defaults ($4,000/month expenses), the $15,080.77 net payout covers 3.77 months — before factoring in unemployment benefits, which vary by state and are calculated separately from severance.
Unlike many countries, US federal law does not require employers to offer severance at all (with narrow exceptions like the WARN Act for mass layoffs, which governs notice, not pay). Where a package is offered, one to two weeks of pay per year of service is a common structure — but it's set by company policy or individual negotiation, not by statute, so it varies widely.
Severance is supplemental wages under IRS Publication 15. Employers generally withhold at a flat 22% federal rate for amounts under $1 million, and 37% on any portion above that. Withholding is not the same as your final tax bill — you reconcile the difference when you file, and may get some back.
Yes. Severance is treated as wages, so FICA applies. Social Security stops once you pass the annual wage base for the year; Medicare has no cap and continues on the full amount.
There is no federal requirement to provide severance at all. Where it is offered, one to two weeks of pay per year of service is a common structure, though it varies widely by employer, seniority and whether the package is negotiated individually.
It depends on your state and on how the payment is characterised. Some states treat a lump sum as wages that delay the start of benefits; others do not. Check with your state unemployment office before assuming either way, since the rules differ substantially.