What is severance pay?

Severance pay is compensation an employer provides to an employee upon termination of employment. It typically includes a lump sum payment based on years of service, salary, and may also include continued benefits, PTO payout, and other compensation.

How many weeks of severance should I expect?

A common formula is one week of pay per year of service. However, some employers offer two weeks per year, or more for executives. The actual amount depends on company policy, employment contracts, and negotiation.

Is severance legally required?

In the United States, severance pay is not legally required under federal law. However, some states have specific requirements, and severance may be mandated by employment contracts, company policies, or collective bargaining agreements.

Is severance taxable?

Yes, severance pay is considered taxable income by the IRS. Employers typically withhold federal income tax, Social Security, and Medicare taxes. State income tax may also apply depending on your state of residence.

Does unused PTO increase severance?

Yes, unused PTO is typically paid out separately from severance. Many states require employers to pay out accrued unused vacation time upon termination. This payout is in addition to any severance compensation.

Can I negotiate my severance package?

Yes, severance packages are often negotiable. You can negotiate for more weeks of pay, extended health benefits, accelerated stock vesting, outplacement services, and a favorable reference. Having an attorney review the agreement can be beneficial.

Will severance affect unemployment benefits?

Severance pay may affect unemployment benefits depending on state laws. Some states reduce unemployment benefits by the amount of severance received, while others allow you to receive both without reduction.

How accurate is this calculator?

This calculator provides estimates based on common severance formulas. Actual severance packages vary by employer policy, employment contracts, state laws, and individual circumstances. Use this as a planning tool and consult with an attorney for your specific situation.

Severance Pay Calculator

Estimate your severance package after layoffs or termination

Finance

Calculator

Input Values

Annual Salary ($)*

Pay Frequency

Years of Service*

Weeks Per Year of Service*

Bonus Included?

YesNo

Bonus Amount ($)

Unused PTO Hours

PTO Hourly Rate ($)

Estimated Tax Rate (%)

Other Exit Benefits ($)

State (Optional)

Ready to Calculate

Enter your salary, years of service, and other details above, then click Calculate to estimate your severance package.

About This Tool

Estimate your severance package after layoffs or termination. Calculate gross severance pay, estimated taxes, PTO payout, and total exit compensation.

Formula: Gross Severance = (Annual Salary ÷ 52) × Weeks Per Year × Years of Service. Net severance = Total compensation minus estimated taxes.

Quick Example

Employee with $75,000 salary, 5 years of service:

Annual Salary$75,000

Years of Service5

Weeks Per Year1

Gross Severance$7,211.54

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