Severance Pay Calculator
Estimate severance pay from years of service and salary, pick 1 or 2 weeks per year (or a custom formula), and see federal supplemental tax, FICA, and net payout.
Severance Pay Calculator
How do you want to enter pay?
Annual Gross Salary
Years of Service
Severance Formula
Cap & Add-Ons
Tax Settings
Estimates only. Not tax, legal, or financial advice. Actual severance and withholding depend on your employer's policy, W-4 elections, state law, and year-to-date wages.
Plan Your Last Day, Down to the Hour
Track every hour through your final day so nothing slips off your last paycheck. The Timeclock44 app handles overtime, PTO, and multi-job pay automatically.
How the Severance Pay Calculator Works
Enter your pay, your years of service, and a severance formula. The tool converts your pay basis (annual, weekly, or hourly with hours per week) into a weekly rate, multiplies that by the weeks you're entitled to, and adds any optional lump sum. From there it estimates federal supplemental withholding at 22% (37% on the portion above $1,000,000), optional FICA at 7.65%, and a state and local tax rate you control.
Decimal years of service are allowed, so 5.5 years works the same as 5 years. If you set a cap on total weeks (many employers use 26 or 52), the math respects it. Tracking exact hours and overtime through your final week? The Timeclock44 app keeps that record clean.
Severance Pay Formulas: 1 Week, 2 Weeks, OPM Federal, or Custom
Private-sector severance usually pays 1 or 2 weeks per year of service. The "1 wk/yr" preset is the typical minimum for non-executive roles. The "2 wk/yr" preset is the standard for full-time, long-tenure employees. Executive packages often exceed both, which is what the custom option is for.
The OPM Federal preset follows the formula used for federal civil-service employees: 1 week per year for the first 10 years, 2 weeks per year beyond 10, plus an age adjustment for employees over 40 (an extra 2.5% of the basic allowance for each full quarter-year over age 40). OPM caps lifetime severance at 52 weeks, and the calculator honors that cap automatically.
How Severance Pay Is Taxed in 2026
The IRS treats severance as supplemental wages. For 2026, employers withhold federal income tax at a flat 22% on supplemental wage payments, jumping to 37% on the portion above $1,000,000 in a calendar year. FICA still applies: 6.2% Social Security up to the 2026 wage base of $176,100 in total wages, plus 1.45% Medicare with no cap. An extra 0.9% Medicare surtax applies on wages above $200,000 (single) but is left out of this calculator for simplicity.
State income tax is the wildcard. Some states (Texas, Florida, Tennessee, and others) charge no income tax. Others sit between 4% and 13%. The state field defaults to 5%, but adjust it to your actual rate. Salary continuation may be withheld at your normal W-4 rate instead of the 22% flat rate, which can change your final net even when the gross is the same.
Negotiating and Planning Around Your Severance
Before you sign a release of claims, review the offer against your employee handbook, prior offer letter, and any company severance policy. Common negotiation levers: more weeks of pay, extended health coverage or COBRA reimbursement, accelerated equity vesting, outplacement services, and reference language. If you suspect unpaid overtime or miscalculated wages before the offer, our back pay calculator can help size up what's already owed and bring it into the conversation. Don't skip the rollover side either: 401(k) timing, COBRA enrollment windows, and your state's unemployment rules can all swing the after-tax value of your severance by more than a percentage point on the withholding line.
Frequently Asked Questions
Common questions about severance pay calculator
How is severance pay calculated?
The most common formula multiplies your weekly pay rate by a set number of weeks for each year of service, typically 1 or 2 weeks per year. Many employers cap total severance at 26 or 52 weeks. If you also have unused vacation, run the numbers through our PTO accrual calculator to see what should be added on top.
Is severance pay required by law in the US?
No federal law requires severance pay. The FLSA does not mandate it, so severance is usually a matter of agreement between employer and employee. Exceptions include certain WARN Act layoffs and federal employees covered by OPM rules.
How is severance pay taxed?
The IRS treats severance as supplemental wages. Employers typically withhold a flat 22% for federal income tax, jumping to 37% on amounts above $1,000,000 in a calendar year. Social Security (6.2%), Medicare (1.45%), and state income tax also apply. For the regular-paycheck side of your exit, see our final paycheck calculator.
Lump sum vs. salary continuation, which is better?
A lump sum gives you immediate access and a clean break, but employers usually withhold at the 22% flat supplemental rate. Salary continuation spreads income across pay periods (and sometimes tax years), can keep benefits active longer, and may be withheld at your normal W-4 rate. Neither option wins for everyone; the right call depends on your tax bracket, benefits needs, and cash flow.
Do I owe Social Security and Medicare on severance?
Yes. Severance counts as wages subject to FICA: 6.2% Social Security (up to the 2026 wage base of $176,100) plus 1.45% Medicare with no cap. If your year-to-date wages already passed the Social Security wage base, the 6.2% portion may not apply to part of the severance.
How many weeks of severance is typical?
Industry surveys put the most common range at 1 to 2 weeks of pay per year of service. Executive packages often run higher (3 to 4 weeks per year). Federal employees follow the OPM formula: 1 week per year for the first 10 years, 2 weeks per year beyond 10, with an age adjustment after 40 and a lifetime cap of 52 weeks.
Can I negotiate severance pay?
Often yes, especially when you are being asked to sign a release of claims. Common levers: more weeks of pay, COBRA reimbursement, accelerated equity vesting, outplacement services, and a neutral or positive reference. If you suspect you were underpaid before the offer, our back pay calculator can help quantify what you may already be owed.
Does severance affect unemployment benefits?
It depends on the state. Some states delay or reduce unemployment benefits while severance is being paid out, while others ignore lump-sum severance entirely. Check with your state's unemployment agency before you apply.