Severance pay calculator

No. In the United States the Fair Labor Standards Act does not require severance pay; the U.S. Department of Labor calls it a matter of agreement between an employer and an employee. It usually comes from a company policy, an offer letter, or a negotiated separation agreement. The exception is when severance was already promised in a contract, in which case the employer has to honor it. Rules differ in other countries, and this tool covers the US only.

The common formula is a set number of weeks of pay per year of service. One to two weeks per year is the typical range, with roughly one week for hourly staff and up to two for salaried or exempt roles, though seniority and the size of the layoff move it. The calculator above multiplies your weekly pay by the weeks-per-year figure and your years of service, then adds any unused PTO payout.

The IRS treats severance as supplemental wages. Most employers withhold federal income tax at the flat supplemental rate of 22% (37% on any amount above $1 million in a year), and Social Security and Medicare take another 7.65%. That 7.65% assumes you have not yet passed the Social Security wage base for the year, which is $184,500 in 2026; above it, the 6.2% Social Security part no longer applies. State income tax may apply on top, which this tool does not estimate. Withholding is not your final tax bill: if too much was held back, you get it back when you file.

Either. A lump sum arrives as one payment, which is simple and lets you move on. Salary continuation pays out over weeks or months on the normal payroll schedule, which can keep some benefits active but may count as ongoing income. The structure matters for both taxes and unemployment timing, so it is worth clarifying before you sign.

It depends on your state and how the severance is paid. A lump sum often lets you file for unemployment right after your last day, while salary continuation can be treated as ongoing wages that delay benefits until the payments end. Some states reduce benefits dollar for dollar, others do not count severance at all. Check your state unemployment agency before you assume either way.

The federal Worker Adjustment and Retraining Notification Act requires employers with 100 or more employees to give 60 calendar days of advance notice before a plant closing or mass layoff. It is a notice rule, not a severance rule: it does not entitle you to a severance package, though some employers pay in lieu of notice. Several states have their own stricter mini-WARN laws.

That depends on your state and your employer's policy. Some states require accrued, unused vacation to be paid on separation; others leave it to company policy. This calculator lets you add unused PTO days so you can see the combined payout, but confirm your own state's rule and your handbook before counting on it.

Yes, and it is often expected. Beyond the number of weeks, you can negotiate the payout structure, an earlier or later benefits end date, payment for unused PTO, a neutral reference, outplacement help, and the terms of any release you are asked to sign. Ask for time to review the agreement rather than signing on the spot; a lump sum is easier to weigh once you know what it buys you.

Treat it as runway rather than a windfall. Divide the after-tax amount by your monthly spending and you get the number of months you can cover, which is the number that decides whether you can choose your next move deliberately or have to grab the first offer. That breathing room is the point: it is enough time to figure out what you actually want next instead of repeating the job you just left.