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.

Federal civil service severance is set by statute, not by the employer. The basic allowance is one week of basic pay for each full year of creditable service through 10 years, two weeks for each full year beyond 10, plus 25% of the applicable amount for each remaining full 3 months. On top of that comes an age adjustment of 2.5% for every full 3 months you are over 40. Twenty years of service is 30 weeks of basic allowance before any age adjustment, and no package can exceed 52 weeks in a lifetime.

A reduction in force is one of the qualifying involuntary separations, so it pays under the standard statutory formula rather than a special RIF rate. What decides your number is service and age, not the reason for the cut: 10 years of service is 10 weeks of basic allowance, 20 years is 30 weeks, and every year of age over 40 adds another 10% on top of that allowance. Resigning before the notice takes effect can forfeit the entitlement, so check the wording of your RIF notice first.

No, and this is where federal packages differ most from private-sector ones. Federal severance accrues day by day after separation and is paid on the same pay period schedule you were already on, as if you were still employed, until the fund runs out. Because it arrives like regular wages rather than as a single supplemental payment, it is generally withheld as regular wages instead of at the flat 22% supplemental rate. Payments also stop if you take another qualifying federal appointment.

In the private sector, at the common one to two weeks per year, 10 years is usually 10 to 20 weeks of pay: on an $80,000 salary that is roughly $15,400 to $30,800 gross. For a federal employee the statutory answer is exact rather than typical: 10 weeks of basic allowance, increased by 2.5% for each full 3 months of age over 40. Use the calculator above for the private-sector case and the federal tables for the civil service one.

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.