Free · estimates for 2026

Severance Pay Calculator

Estimate your severance pay at Standard, Senior, and Executive tiers with a side-by-side comparison and WARN Act information.

Quick answer

Severance pay is generally not legally required in the US — there's no federal law (including the FLSA) mandating it. It's typically offered voluntarily, through an employment contract, or via a written company policy.

The common formula is about 1 week of pay per year of service (standard), roughly 2 weeks per year for senior or manager roles, and executives often negotiate 3–12 months of base salary.

Worked example: an $85,000 salary at 5 years of service ≈ ~$8,173 at the standard rate of 1 week per year (about $1,635/week × 5 weeks). Severance is taxable as ordinary income — subject to federal, Social Security, Medicare, and state withholding.

Data sourced from official state labor department websites and the US Department of Labor (dol.gov). Last updated: June 2026. Calculator results are estimates for informational purposes only. For disputes involving unpaid wages or wrongful termination, consult a licensed employment attorney in your state.

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Frequently Asked Questions

Is my employer legally required to give me severance pay?
No. The United States has no federal law (including FLSA) requiring severance pay. It is purely voluntary unless: (1) your employment contract or offer letter specifies severance, (2) a collective bargaining agreement (union contract) requires it, or (3) the employer has an established written severance policy. WARN Act (60-day notice for mass layoffs of 100+ employees) can trigger pay obligations when not followed, but is not the same as severance.
How much severance pay is typical?
The most common severance formula in the US is 1 week of pay per year of service for non-executive employees, and 2 weeks per year for senior/manager-level employees. Executive severance is typically negotiated separately and can include 3–12 months of base salary. These are industry norms, not legal requirements.
Can I negotiate my severance package?
Yes — and you should. Most employers start with a standard formula but have flexibility, especially if you've been with the company several years or hold specialized knowledge. Key items to negotiate: extended health insurance (COBRA offset), accelerated vesting of stock options, non-disparagement clause removal, and outplacement services. Never sign a severance agreement without reading it first — most include a release of legal claims against the employer.
Is severance pay taxed?
Yes, severance pay is taxed as ordinary income — subject to federal income tax, Social Security, and Medicare withholding, plus state taxes. Employers typically withhold at the standard supplemental wage rate (22% federal for amounts up to $1 million). If paid as a lump sum in a high-income year, consider adjusting your W-4 or making estimated tax payments to avoid an underpayment penalty.
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