Free Severance Pay Calculator
Laid off or expecting it? Estimate your severance package from your pay, years of service, and company policy — and see how many months of essential spending it actually covers.
Your pay and service
Estimates only, before tax. Your separation agreement controls: check it for minimums, caps, and whether PTO is paid out. This is not legal or tax advice.
Layoff-budget checklist
- File for unemployment immediately — do not wait for severance to run out; some states make you wait, but the claim clock starts when you file.
- Price your health coverage — compare COBRA, the ACA marketplace (job loss is a qualifying event), and a spouse's plan before the enrollment window closes.
- Freeze non-essential spending — cut to the essentials number you entered above until income resumes.
- Decide on your 401(k) — leave it, roll it to an IRA, or roll it to a new employer's plan. Cashing out triggers tax plus a 10% penalty if you are under 59½.
- Review the separation agreement before signing — especially non-compete terms, the release of claims, and the deadline to sign. Ask about more weeks, extended coverage, or outplacement help.
- Roll unvested equity and bonuses into the conversation — anything unvested or unpaid is leverage, not a lost cause.
How severance is usually calculated
- Start with weekly pay — annual salary divided by 52, or hourly rate times hours per week.
- Multiply by the policy — most often one to two weeks of pay per year of service, sometimes with a floor (like four weeks) or a cap.
- Add PTO payout — many employers pay out unused vacation; some states require it by law.
- Compare against spending — the number that matters is not the lump sum, it is how many months of essentials it buys you.
Why the headline number misleads
A $25,000 severance package sounds like a lot until you divide it by your monthly spending. At $3,500 a month in essentials, that is about seven months — comfortable. At $6,000 a month, it is barely four. Taxes shrink it further: severance is taxed as supplemental wages, and a flat 22% federal withholding may not match your actual rate. And timing matters as much as size. A lump sum paid in January is taxed in that year's return; salary continuation keeps benefits running longer but can delay unemployment in some states. Run the numbers both ways — lump sum versus continuation — before you sign anything, and remember the first offer is frequently negotiable.
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Frequently asked questions
How many weeks of severance do companies usually offer?
A common formula is one to two weeks of pay per year of service, sometimes with a minimum (for example, four weeks) and sometimes with a cap. Senior roles and executives often negotiate more. Your offer letter, employee handbook, or separation agreement states the exact policy.
Is severance pay taxed?
Yes. Severance is treated as supplemental wages and is subject to federal and state income tax, Social Security, and Medicare. Employers often withhold a flat 22% for federal tax, which may be more or less than your actual rate — the difference settles at tax time.
Does severance affect unemployment benefits?
It depends on your state. Some states delay unemployment benefits until severance runs out; others let you collect both at once. File promptly either way and report the severance exactly as your state agency asks — delaying your claim can cost you weeks.
Can I negotiate a severance package?
Often, yes. The first offer is not always final, especially if you have leverage: unvested equity, a non-compete clause, unused benefits, or a potential legal claim. Common asks include more weeks of pay, extended health coverage, outplacement help, and a later end date. Get any agreement reviewed before you sign.