Free Severance Pay Calculator
A severance pay calculator estimates how much an employer pays when your job ends by multiplying your weekly pay by the weeks of severance your years of service earn, commonly 1 to 4 weeks per year. This one adds unused PTO, a prorated bonus, and employer-paid COBRA, then estimates 2026 tax withholding so you can see the gross and net value of a severance package.
2026 U.S. severance estimateEstimated package value
$25,450.00
13 weeks of severance. About $17,307.25 after estimated taxes, including $1,950.00 of COBRA coverage.
Severance package breakdown
Results update as valid inputs change. Each line is rounded to the cent.
Weeks of severance
13
6.5 years x 2 weeks.
Gross severance pay
$19,500.00
$1,500.00 per week.
Estimated net cash
$15,357.25
$23,500.00 cash minus $8,142.75 in estimated taxes.
Total package value
$25,450.00
Includes $1,950.00 of employer-paid COBRA.
| Item | Amount |
|---|---|
| Gross severance pay13 weeks x $1,500.00 weekly pay | $19,500.00 |
| Unused PTO payout40 hours x $37.50 per hour | $1,500.00 |
| Prorated bonusFlat amount you entered | $2,500.00 |
| Extra lump sumFlat amount you entered | $0.00 |
| Total cash before taxesTaxable supplemental wages | $23,500.00 |
| Federal income tax withholding22% flat supplemental rate on $23,500.00 | -$5,170.00 |
| Social Security6.2% on $23,500.00 (wage base $184,500.00) | -$1,457.00 |
| Medicare1.45% on $23,500.00 | -$340.75 |
| Additional Medicare0.9% on $0.00 over $200,000.00 | -$0.00 |
| State and local withholding5% on $23,500.00 | -$1,175.00 |
| Total estimated taxesFederal, Social Security, Medicare, and state or local | -$8,142.75 |
| Estimated net cashTotal cash minus estimated taxes | $15,357.25 |
| Employer-paid COBRA or health premiums3 months x $650.00, not taxed when paid directly to the plan | $1,950.00 |
| Total package value (gross)Total cash plus COBRA value | $25,450.00 |
| Estimated net package valueNet cash plus COBRA value | $17,307.25 |
Planning estimate only. This is not tax or legal advice. Severance is generally not required by U.S. federal law; it is set by employer policy, an employment contract, or a negotiated agreement. WARN Act pay in lieu of notice for covered mass layoffs is a separate obligation. Actual withholding depends on your employer's payroll, Form W-4, and state and local rules.
Compare common severance formulas
Your pay, service, floor, cap, and add-ons with 1 to 4 weeks of pay per year of service.
| Formula | Weeks | Severance pay | Package value | Net cash |
|---|---|---|---|---|
| 1 week per year | 6.5 | $9,750.00 | $15,700.00 | $8,985.62 |
| 2 weeks per year (yours) | 13 | $19,500.00 | $25,450.00 | $15,357.25 |
| 3 weeks per year | 19.5 | $29,250.00 | $35,200.00 | $21,728.87 |
| 4 weeks per year | 26 | $39,000.00 | $44,950.00 | $28,100.50 |
How severance pay is calculated
Most severance policies tie pay to tenure. The employer converts your pay to a weekly amount, multiplies it by the weeks earned for each year of service, and applies any minimum or maximum. Other cash and benefits are layered on top.
Weeks of severance
Years of service, including partial years, times weeks per year. A policy might pay 2 weeks per year with a 4-week minimum and a 26-week maximum, so 6.5 years earns 13 weeks.
PTO, bonus, and lump sums
Some states require payout of earned vacation at separation and others leave it to policy. Prorated bonuses and extra lump sums are usually spelled out in the separation agreement.
Federal income tax
Severance is supplemental wages. Paid separately, it is commonly withheld at a flat 22%, and supplemental wages above $1,000,000 in 2026 must be withheld at 37%. Salary continuation may instead be withheld like regular pay.
Social Security, Medicare, and COBRA
Severance owes 6.2% Social Security up to the $184,500.00 wage base, 1.45% Medicare, and 0.9% Additional Medicare above $200,000.00. COBRA premiums the employer pays directly are generally not taxed; cash paid to you for premiums usually is.
Severance = weekly pay x min(max(years of service x weeks per year, minimum), maximum)
How to use the severance calculator
1. Enter your pay
Choose annual salary or hourly rate and enter your hours per week. The calculator converts it to weekly pay, the base most severance formulas use.
2. Enter your years of service
Add full years and extra months with the employer. Partial years are prorated, so 6 years and 6 months counts as 6.5 years.
3. Set the severance formula
Enter the weeks of pay per year of service from your offer or employer policy (2 is common), plus any minimum or maximum weeks.
4. Add the rest of the package and taxes
Include unused PTO, a prorated bonus, extra lump sums, and months of employer-paid COBRA. Add your state rate and year-to-date wages to estimate taxes, then copy or download the summary.
Worked severance package example
An employee earning $78,000 a year with 6 years and 6 months of service is offered 2 weeks per year (4-week minimum, 26-week maximum), 40 hours of unused PTO, a $2,500 prorated bonus, and 3 months of COBRA at $650. They have $60,000 of wages so far this year and a 5% state rate.
- Weekly pay: $78,000 / 52 = $1,500.00. Weeks: 6.5 x 2 = 13, so severance is $19,500.00.
- PTO: 40 hours x $37.50 = $1,500.00. With the bonus, total cash is $23,500.00.
- Federal: 22% = $5,170.00. Social Security: 6.2% = $1,457.00. Medicare: 1.45% = $340.75. State: 5% = $1,175.00.
- Estimated taxes $8,142.75, so net cash is $15,357.25.
- COBRA adds $1,950.00, for a $25,450.00 package worth about $17,307.25 after taxes.
Frequently asked questions
How is severance pay calculated?
Most employers multiply weekly pay by a set number of weeks for each year of service, such as 2 weeks per year, often with a minimum and a maximum. Weekly pay is annual salary divided by 52, or hourly rate times weekly hours. Unused PTO, a prorated bonus, and health coverage are usually added separately.
Is severance pay taxed?
Yes. The IRS treats severance pay as wages, and employers usually withhold federal income tax as supplemental wages at a flat 22 percent (37 percent above $1,000,000 in the year), plus Social Security, Medicare, and any state or local tax. Employer-paid COBRA premiums paid directly to the plan are generally not taxable wages.
How many weeks of severance per year of service is typical?
One to two weeks of pay per year of service is the most common range, with many packages using 2 weeks and a floor of 2 to 4 weeks. Senior roles and negotiated agreements often reach 3 or 4 weeks per year or a fixed number of months.
Is severance pay required by law?
Generally no. U.S. federal law does not require severance pay; it depends on employer policy, an employment contract, a union agreement, or negotiation. The WARN Act is different: covered employers that skip the required 60-day notice of a mass layoff or plant closing can owe back pay and benefits for the missed notice period.
Does severance affect unemployment benefits?
It depends on your state. Some states reduce or delay unemployment benefits for the weeks covered by severance, especially when it is paid as salary continuation, while others ignore a lump sum. Report severance when you apply and check with your state unemployment agency.
Official sources
Tax rates and thresholds for 2026 come from the IRS; severance and layoff notice rules come from the Department of Labor.
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