Severance Pay Calculator

Most employers use a weeks-of-pay-per-year-of-service rule. You take your weekly pay (annual salary divided by 52), multiply it by your years of service, and multiply that by the number of weeks your employer credits per year, commonly 1 to 2 weeks. Some policies cap the total, often around 26 weeks. There is no single legal formula, so the rate comes from your policy, contract, or negotiation.

Not in the United States. No federal law requires private employers to pay severance. The WARN Act requires 60 days' advance notice of a mass layoff or plant closing at larger employers, but that is notice, not pay. Severance is typically a matter of company policy, an employment contract, or a negotiated separation agreement.

A common benchmark is 1 to 2 weeks of pay for each year of service, with managers and executives often receiving more. Two weeks per year is a frequent standard; some companies offer a flat number of weeks regardless of tenure. What you are offered depends heavily on your employer, your level, and whether you negotiate.

Yes. The IRS treats severance as supplemental wages. Federal income tax is usually withheld at a flat 22%, and Social Security and Medicare (7.65%) also apply. State and local taxes may apply too. The take-home figure in this calculator applies the 22% and 7.65% federal rates as an estimate, not your final tax bill.

Often, yes. Because severance is usually not a legal entitlement, the initial offer is frequently a starting point. Employees negotiate the number of weeks, continued health coverage, the payout of unused leave, and the terms of any release they are asked to sign. Consider legal advice before signing a separation agreement.

No. Federal employees have a fixed statutory formula (one week of pay per year for the first 10 years, two weeks per year after that, plus an age adjustment over 40, capped at 52 weeks). If you are a federal employee, use our federal severance pay calculator instead of this general tool.