Introduction
When you lose a job, your employer may offer you severance pay. This is money given to help you while you look for new work. But how much should you get? The answer depends on your salary, how long you worked there, your job level, and other factors. Many people accept the first offer without knowing if it is fair.
This severance calculator gives you a clear estimate of what your severance package could be worth. Enter your annual salary, years of service, and state, and the tool calculates your estimated severance pay. It shows your estimated severance package and how it compares with what U.S. employers give at your position level. You can also add your position level, unused vacation days, and bonus pay to get a more accurate result.
The calculator compares your estimate with the average weeks of severance U.S. employers give at your position level, and flags legal protections that may apply based on factors like your age and the circumstances of your termination. It also breaks down every step of the math so you can see exactly how your numbers are calculated. Use this tool to understand your severance before you sign anything.
How to Use Our Severance Calculator
Enter your job and pay details below to get an estimate of your severance package. The calculator also shows an itemized breakdown, a projection table, and a step-by-step explanation of how your results are found.
Annual Salary: Type in your yearly pay before taxes. This is the base number used to figure out your weekly and daily pay rates.
Years of Service: Enter how long you have worked at the company. You can use half years, like 2.5, if needed.
State: Pick the state where you work. The calculator shows how that state withholds income tax from severance pay, next to the Estimated Combined Tax Rate field.
Display Currency: Choose the currency you want your results shown in. The default is US dollars.
Position Level: Select the level that best fits your role, from all other employees up to top executive. In Right Management's 2013 survey of employers, U.S. organizations gave involuntarily separated employees an average of 1.72 weeks of severance per year of service at the all other employees level, 1.91 weeks for professional and technical staff, 2.17 weeks for department heads, managers and supervisors, 2.84 weeks for senior executives and 3.16 weeks for top executives.11 The calculator multiplies the policy rate by your level's figure divided by 1.72, so a policy rate of 1 week per year becomes about 1.84 weeks for a top executive. The results also compare your estimate with the average for your level. A Custom rate is used exactly as you enter it.
Age Bracket: Select whether you are under 40 or 40 and older. Workers 40 and older have extra legal protections that may affect their severance.4
Employer's Severance Policy: Pick the rate your employer's policy uses: 1, 2 or 3 weeks of pay, or 1 month of pay, for each year of service. In Right Management's survey, 1 week per year of service was the rate U.S. employers reported most often for all other employees, at 36.1% of employers.11 If you are not sure, leave it on 1 week per year. Choose "Custom Rate" if your employer uses a different formula.
Custom Weeks Per Year of Service: This field appears only when you select "Custom Rate." Type in the number of weeks your employer gives for each year you worked there.
Unused Vacation Days: Enter the number of accrued vacation days you have not used. The federal Fair Labor Standards Act does not require pay for unused vacation; it is a matter of agreement between you and your employer.2
Bonus / Additional Payout: Add any guaranteed bonus, commission, or other cash your employer owes you at the time of separation.
Notice Period (Weeks): Enter the number of weeks of pay in lieu of notice your employer is offering or owes you.
Estimated Combined Tax Rate (%): Type in your estimated federal plus state tax rate. This lets the calculator show you an after-tax view of your cash severance.
Health Benefits Continuation (Months): Enter how many months your employer will keep covering your health insurance after you leave.
Estimated Monthly Health Benefit Cost: Type in the monthly cost of your health plan, such as the COBRA premium. Both this field and the months field must be filled in for health benefits to appear in your results.
Negotiation Factors: Check every box that applies to your situation. The results list the factors you checked and flag the legal protections some of them bring, such as the WARN Act for a mass layoff and the OWBPA for workers aged 40 or older.
What Is Severance Pay?
Severance pay is money your employer gives you when they let you go from your job. The federal Fair Labor Standards Act does not require severance pay; it is a matter of agreement between an employer and an employee.1 Many companies offer it as part of a separation package. The amount you get usually depends on how long you worked there, how much you earned, and your company's own policy.
How Is Severance Pay Calculated?
The most common formula is one to two weeks of pay for every year you worked at the company. For example, if you earned $1,000 per week and worked for 5 years, 1 week of pay per year of service comes to $5,000. Senior employees like directors or executives often receive more generous terms, sometimes a full month of pay per year of service.
What Can Be Included in a Severance Package?
A severance package can include more than just base pay. Many employers also offer:
- Payout for unused vacation days you earned but did not take
- Pay in lieu of notice if you were let go without advance warning
- Bonus or commission payments you were already owed
- Health insurance continuation where the employer covers your premiums for a set number of months
Is Severance Pay Taxed?
Yes. Severance payments are wages, so your employer withholds federal income tax, Social Security tax, and Medicare tax from them.3 If your state has an income tax, that will be withheld too. Because severance can be a large lump sum, it may push you into a higher tax bracket for the year you receive it. Like a bonus, severance pay counts as supplemental wages for withholding.3 To see how your severance affects your overall take-home pay, enter your estimated combined tax rate in the Advanced Options section above.
Can You Negotiate Severance?
You can almost always try to negotiate. Employers offer severance in exchange for something from you, usually a signed release agreement where you give up the right to sue. That release has value, which means you have room to ask for more. Factors that strengthen your position include long tenure, strong performance, age 40 or older (which triggers extra legal protections under the OWBPA), and whether you were part of a mass layoff covered by the WARN Act.
Key Things to Know Before You Sign
Do not sign a severance agreement right away. Read every word. Pay close attention to non-compete clauses, non-disparagement terms, and what legal claims you are giving up. If your package feels low or your situation is complicated, talk to an employment attorney. Many offer free first consultations. Once you sign a release, you generally cannot go back and ask for more.