Severance Pay Calculator
Gross payout, real tax withholding, and how many months it actually covers.
Severance Pay Calculator
Your Pay & Tenure
Add-Ons & Withholding
Your Severance Estimate
Severance is not legally required in most states unless promised in a contract or policy. Receiving a lump sum can also delay unemployment insurance eligibility in some states — check your state unemployment office before assuming you can collect both at once.
Based on your results — what to do next:
Is your safety net big enough?
Your severance covers about 2.4 months of expenses — compare that to the 3–9 month emergency fund target.
Budget your severance runway
Stretch $9,425 across your job search with a 50/30/20 plan built around $4,000/mo expenses.
Recheck your full-year tax picture
A $14,423 lump sum can push you into a higher bracket this year — recalculate your true take-home pay.
Severance pay is a lump-sum or salary-continuation payment an employer offers when ending your employment, typically calculated as a number of weeks of pay per year of service. This calculator computes your gross severance, applies 2026 federal supplemental-wage withholding plus FICA and state tax, and shows your true net payout — along with how many months of expenses and COBRA coverage it can fund.
How Severance Pay Is Calculated
Most severance packages follow a simple weeks-per-year-of-service formula, then withhold taxes the same way a bonus is withheld — as a supplemental wage, not your regular paycheck rate.
| Withholding | 2026 Rate |
|---|---|
| Federal (supplemental wage rate) | 22% flat (37% over $1M/yr) |
| Social Security | 6.2% up to $184,500 wage base |
| Medicare | 1.45% (no cap) + 0.9% over $200k |
| State | Varies — enter your marginal rate |
Because the flat 22% federal rate rarely matches your actual marginal tax bracket, many people are surprised at tax time — either owing more (if their real bracket is above 22%) or getting a larger refund (if it's below). Use the income tax calculator to reconcile your full-year liability once you know your total income.
⚠️ Expert Pro-Tip
Everything in a severance offer is negotiable except what's legally owed to you (like accrued PTO in most states). The weeks-per-year formula, the minimum guarantee, COBRA subsidy months, and even the timing of the payout (lump sum vs. salary continuation) are all starting points, not final terms. Run this calculator with your initial offer, then run it again with a counter-offer — an extra 4 weeks of service credit or a bumped-up minimum guarantee can be worth thousands more than it looks on the offer letter.
Understanding Your Severance Package in 2026
There's No Federal "Severance Law"
Unlike overtime or minimum wage, severance pay is not required by federal law (with narrow exceptions like the WARN Act for mass layoffs at larger employers). Whatever you're offered is governed entirely by your employment contract, your employer's written policy, or — most often — what you can negotiate on your way out the door.
Why the Tax Withholding Looks So High
Severance, like bonuses and commissions, is a "supplemental wage" under IRS rules. Employers almost always use the flat 22% federal withholding method rather than your W-4 elections, on top of standard FICA taxes. That's why a $30,000 severance check can arrive as barely $21,000 — it's not necessarily your final tax bill, just the withholding. You reconcile the real number when you file your return for the year.
Severance vs. Unemployment: Check Your State
A common and costly mistake is assuming severance and unemployment insurance stack automatically. Many states will not pay unemployment benefits until the period "covered" by a lump-sum severance payment has elapsed, while others allow both. Before you budget around both income sources, confirm the rule with your state's unemployment office.
What to Negotiate Beyond the Check
Cash isn't the only lever. COBRA premium subsidies, extended equity vesting, outplacement services, a neutral job reference, and the classification of your departure (layoff vs. termination) can all matter as much as the headline number — especially since COBRA alone often runs $500–$800/month per person.
Next Step: Related Calculators
Emergency Fund Calculator
3–9 month expense target by risk profile, progress tracker, and monthly savings roadmap.
50/30/20 Budget Calculator
Plan monthly spending across needs, wants, and savings with multiple budget rules.
2026 Take-Home Pay Calculator
Net paycheck after all federal, state & FICA taxes.