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Severance Pay Calculator

Estimate your severance package based on salary, years of service, and role level

Employment Details
$
Severance Formula
Continuation Benefits
$
$
Severance Package Estimate
$15,600
Estimated total severance package
Weeks of Severance
10
Base Cash Payout
$14,423
Health Continuation
$1,800
Outplacement
$2,000
Tax Estimate (22%)
$3,173
Net After Tax
$12,427
Base Severance$14,423
Health Insurance Continuation$1,800
Outplacement Services$2,000
Total Package Value$18,223
Tax Withholding (est. 22%)-$3,173
Net Cash After Tax$15,050
Industry Severance Benchmarks
IndustryTypical FormulaAvg WeeksNotes
Technology2-4 wk/yr8-16 weeksOften includes equity vesting
Finance/Banking2-3 wk/yr10-12 weeksNon-competes common
Healthcare1-2 wk/yr6-10 weeksCOBRA often included
Retail/Hospitality1 wk/yr2-6 weeksLower due to hourly nature
Government/Public1 wk/yr4-8 weeksOften subject to civil service rules
Manufacturing1-2 wk/yr4-10 weeksUnion contracts may specify
Legal/Professional2-3 wk/yr8-12 weeksNon-solicitation common
Executive (C-Suite)1-2 mo/yr12-26+ weeksSERP, equity, bonus often included

What Else to Negotiate

  • Accelerated vesting of stock options or RSUs
  • Continuation of bonus (prorated)
  • Career transition coaching or outplacement
  • Positive reference letter and agreement on job title/description
  • Non-disparagement clause (mutual)
  • Extended non-compete review period
  • Reimbursement for legal review of separation agreement

WARN Act (Worker Adjustment and Retraining Notification)

The federal WARN Act requires employers with 100+ employees to provide 60 days advance notice before:

  • Plant closings affecting 50+ workers
  • Mass layoffs of 500+ workers, or 50-499 if they represent 33%+ of workforce

If proper notice is not given, employees may be owed up to 60 days pay and benefits. Some states (CA, NY, NJ) have mini-WARN acts with lower thresholds (75-50 employees).

Severance Agreement Key Points

  • Release of claims: Most severance agreements require you to release legal claims (discrimination, wrongful termination). This is binding.
  • Review period: You have 21 days to review (45 days for group layoffs). You can sign earlier but not required to.
  • ADEA protection (age 40+): If you're over 40, you have 21 days to consider and 7 days to revoke after signing.
  • Non-disparagement: Common clause prohibiting negative statements about employer. Try to negotiate for mutual clause.
  • Non-compete: Carefully review geographic scope, duration, and industry restrictions. Some states (CA, ND, MN) ban them entirely.

Negotiation Tips

  • Ask for more than you expect — start at 1.5x what you want to receive
  • Specify that you want equity vesting accelerated
  • Request extended health benefits (3-6 months is often achievable)
  • Ask for the outplacement/career coaching budget
  • Get a written positive reference letter before you sign anything
  • Consider consulting an employment attorney — many offer free consultations
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How to Use This Calculator

1

Enter Employment Details

Input your annual salary, years of service, and job level or title.

2

Select Severance Terms

Choose the severance formula — typically 1-2 weeks per year of service, or a custom multiplier.

3

Review Package Value

See the total severance amount, equivalent months of pay, and estimated after-tax value.

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Formula & Methodology

Standard Severance
Severance = Weekly Pay × Weeks per Year of Service × Years Worked
Most common formula: 1-2 weeks of pay per year of tenure.
Weekly Pay
Weekly Pay = Annual Salary / 52
Base salary only — typically excludes bonuses, commissions, and stock.
After-Tax Severance
After-Tax = Severance × (1 − Effective Tax Rate)
Severance is taxed as ordinary income in the year received.

About this calculation · Accuracy & Methodology

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Key Terms Explained

Severance Pay Compensation paid to an employee upon termination, typically based on tenure and salary.
Garden Leave A paid period where the terminated employee remains on payroll but does not work.
COBRA Continuation of employer health insurance for 18 months post-termination — employee pays full premium.
Release Agreement A legal document waiving the right to sue the employer, often required to receive severance.
Acceleration Clause A provision that vests unvested stock options or RSUs upon involuntary termination.
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Real-World Examples

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Mid-Career Layoff

Salary: $95,000, Tenure: 7 years, Formula: 2 weeks/year

Result
Severance: $25,577 (14 weeks). After 24% tax: ~$19,439. Plus 3 months COBRA paid.
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Navigating Severance Packages

What to Expect

There is no federal law requiring severance pay, but most companies with 100+ employees offer it. The standard ranges from 1 week per year of service (common) to 3+ weeks (senior executives). Some companies offer a flat amount regardless of tenure — typically 2-6 months of base pay.

Negotiation Strategies

Everything in a severance package is negotiable. Key areas include extending the severance period, continued health benefits (employer-paid COBRA), outplacement services, favorable reference letters, stock vesting acceleration, and removing or shortening non-compete clauses. Employees over 40 receive 21 days to review (per the OWBPA), giving time to negotiate.

Tax Implications

Severance is taxed as ordinary income. Receiving a lump sum can push you into a higher bracket for that year. Ask about spreading payments across two tax years, or negotiate for non-taxable benefits like extended health coverage or outplacement services to reduce the tax hit.

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Frequently Asked Questions

How is severance pay typically calculated?+

The most common formula is one to two weeks of pay per year of service. Entry-level employees usually receive one week per year, mid-level professionals two weeks per year, and executives may receive one month or more per year of service. The calculator lets you select your role level to apply the appropriate multiplier.

Is my employer legally required to offer severance?+

There is no federal law requiring employers to pay severance. However, the WARN Act mandates 60 days advance notice for mass layoffs at companies with 100+ employees, and some employers offer pay in lieu of that notice. Some states have additional requirements, and existing employment contracts or company policies may create an obligation.

Is severance pay subject to taxes?+

Yes, severance pay is treated as ordinary income by the IRS. It is subject to federal income tax (often withheld at the 22% supplemental rate), state income tax, and FICA taxes (Social Security and Medicare). This means your actual take-home will be significantly less than the gross severance amount.

What else besides cash should I negotiate in a severance package?+

Beyond the lump sum, you can negotiate employer-paid COBRA health continuation (typically 3-12 months), outplacement services to help with your job search, accelerated stock option vesting, a positive reference letter, extended laptop or equipment retention, and the timing of the payout to optimize your tax situation.

Does the calculator include the value of continued health benefits?+

Yes. The calculator estimates the value of health insurance continuation (COBRA) based on average employer-sponsored premiums and the number of months of coverage. It also factors in outplacement services if applicable, giving you a total package value beyond just the cash severance amount.

Severance by Tenure (at $90,000 Salary)

Years of Service1 Week/Year2 Weeks/Year3 Weeks/Year
2 years$3,462$6,923$10,385
5 years$8,654$17,308$25,962
10 years$17,308$34,615$51,923
15 years$25,962$51,923$77,885
20 years$34,615$69,231$103,846