Severance Pay Calculator: Amount, Taxes and Take-Home

Your package

Annual base salary

$

Weekly pay is salary ÷ 52.

Years of service

yrs

Weeks of pay per year of service

wks

Common offers are 1 to 2 weeks.

Partial years

Minimum weeks promised

wks

Some plans guarantee a floor, such as 4 weeks.

Maximum weeks (0 for no cap)

wks

Unused vacation or PTO payout

$

Bonus or other lump sum

$

Taxes

Filing status

Wages already paid this year

$

Before this payment. Sets your Social Security cap and tax bracket.

Bonuses already paid this year

$

Counts toward the 37% rule above $1 million.

State income tax withholding

%

Your state supplemental rate. Use 0 if none.

If paid as salary continuation

Weeks paid after December 31

wks

Weeks that land in the next tax year.

Other income next year

$

Use 0 if you expect none.

Severance Pay Calculator12.0 weeks • $17,308 gross

Lump sum in your bank after withholding

$12,176

$17,308 gross, $5,132 withheld (29.7%)

12.0 weeks of severance at $1,442.31 a week is $17,308. Paid as one check, your employer would withhold $3,808 for federal income tax at the flat supplemental rate (22%), $1,324 for Social Security and Medicare. That is close to the tax you should owe.

Weeks of severance

12.0

6.0 years × 2.00 weeks

Severance before tax

$17,308

12.0 × $1,442.31

Lump sum gross

$17,308

With PTO and bonus

Federal income tax withheld

$3,808

Flat 22% supplemental rate

Social Security and Medicare

$1,324

$1,073 SS, $251 Medicare

State withholding

$0

0.00% entered

Take-home after final tax

$12,176

After actual federal tax, estimated

Expected balance due

$0

Actual tax minus withholding

Take-home after withholding$12,17670.3%
Federal income tax withheld$3,80822.0%
Social Security$1,0736.2%
Medicare$2511.4%
State$00.0%

Federal withholding against actual federal tax, by lump sum size

Withheld at the flat rateFederal income tax you actually owe

Hover or touch the chart to read values.

Lump sum or salary continuation

	One lump sum	Paid weekly (12 paychecks of $1,442)
Gross pay	$17,308	$17,308
Paid this tax year	$17,308	$11,538
Paid next tax year	$0	$5,769
Federal income tax withheld	$3,808 (flat rate)	Set by your W-4 each paycheck
Federal income tax you actually owe	$3,808	$2,538
Social Security and Medicare	$1,324	$1,324
State tax	$0	$0
Final take-home after tax	$12,176	$13,445

Spreading it into next year saves about $1,269 in final tax with these numbers. Continuation also delays cash and can change when unemployment benefits start.

Show the steps

Weekly pay: $75,000 ÷ 52 = $1,442.31.
Weeks of severance: 6.00 years × 2.00 weeks = 12.00 weeks.
Severance: 12.00 × $1,442.31 = $17,308. Adding PTO and bonus gives a gross of $17,308.
Federal withholding on supplemental wages: $17,308 at 22% = $3,808, total $3,808.
Social Security: 6.2% on $17,308 (the room left under the $184,500 2026 wage base) = $1,073. Medicare: 1.45% × $17,308 = $251.
Actual federal tax: tax on $87,308 of income less the standard deduction, minus tax on $70,000 alone, using 2026 brackets = $3,808.

Severance formula

Severance = (annual salary ÷ 52) × years of service × weeks per year

Federal withholding = 22% × (supplemental pay up to $1,000,000 this year) + 37% × (the excess)

Severance has no federal formula. Your agreement or company policy sets the weeks, the cap and any release you must sign.
The flat 22% rate is the optional method employers may use. Some use the aggregate method, which can withhold more or less. The final tax is figured on your return either way.
Actual tax assumes wages are your only income, the standard deduction, 2026 brackets and no credits. Next year uses the same 2026 numbers. State rules and your own deductions will change it.
Severance can delay or reduce unemployment benefits in some states. Ask your state agency before you sign or file.

Estimates for planning and learning, not financial, tax, legal or medical advice. Check figures with your lender, tax preparer or doctor before you act.

About this calculator

Most severance offers are built from one simple rule: weeks of pay for each year of service. This calculator turns that rule into dollars, then follows the money through payroll. It shows what a lump sum looks like after federal withholding, Social Security, Medicare and state tax, and how that compares with the tax you will actually owe when you file.

The second part matters more than most people expect. The check you receive is cut using a flat withholding rate. Your tax bill is figured on your whole year. Those two numbers can be far apart, and this page shows the gap so you can plan for a refund or a bill.

How to use it

Enter your annual salary and your years of service, and the weeks per year your offer uses. The presets show common patterns.
Add a minimum or maximum number of weeks if your plan has one, then any PTO payout or bonus.
Fill in your tax details: filing status, wages already paid this year and your state withholding rate.
Compare the one-lump-sum column with the salary-continuation column in the table, and open the steps to check each figure.

How severance is usually calculated

One week per year of service. A common baseline. Six years at a $75,000 salary is six weeks, or $8,654.
Two weeks per year of service. Frequent at mid-size and large employers and in many layoff programs.
Four weeks or more per year. Seen in executive agreements and negotiated packages.
Floors and caps. Plans often guarantee a minimum, such as four weeks, and stop at a maximum, such as 26 weeks.

No federal law sets a severance formula. The amount comes from your employment agreement, your employer’s plan or a negotiation. Many offers also ask you to sign a release of claims, so read the terms and take time to review them.

How severance is taxed

The IRS lists severance pay as supplemental wages, in the same group as bonuses and commissions. It is subject to income tax withholding, Social Security tax and Medicare tax. When an employer pays it separately from regular pay, it may withhold a flat 22%. If a person receives more than $1 million in supplemental wages in a calendar year, the amount above $1 million is withheld at 37%, with no regard to the Form W-4. Employers can also use the aggregate method, which combines the payment with regular wages.

For Social Security, the 2026 wage base is $184,500, so the 6.2% tax stops once your wages for the year reach that amount. Medicare is 1.45% with no limit, and employers withhold an extra 0.9% on wages above $200,000 in the year.

Lump sum or salary continuation

With salary continuation, severance is paid on your normal pay schedule. Health coverage may also continue, depending on the plan. A lump sum gives you cash at once, but the flat withholding can be too high or too low for your situation. If continuation runs past December 31, part of the pay lands in a year when your income may be lower, which can lower the tax. The calculator compares both using 2026 brackets.

Severance and unemployment benefits

States treat severance differently. In some, severance delays benefits or reduces them for the weeks it covers. In others it has little effect. Contact your state unemployment office before you sign or file. Apply promptly even if you expect to be delayed.

WARN Act notice

The federal WARN Act requires covered employers to give 60 calendar days of written notice before a plant closing or mass layoff. Covered employers generally have 100 or more full-time workers. A mass layoff means 50 to 499 full-time workers at a single site, if that is at least 33% of the site’s full-time staff, or 500 or more. If notice is missing, affected workers may recover back pay and benefits for up to 60 days. WARN does not require severance pay. Some states have their own notice laws.

Practice questions

Test yourself with 6 multiple-choice questions on this topic. Choose an answer and press Submit to see if you are right and why.

Sources

IRS Publication 15 (2026), Circular E, section 7: Supplemental Wages (22% flat rate, 37% over $1 million, aggregate method, severance listed as supplemental wages) and Social Security and Medicare rates and wage base.
IRS: tax inflation adjustments for tax year 2026 (standard deductions and tax brackets).
U.S. Department of Labor: Worker’s Guide to the WARN Act.

Common questions

How much severance pay should I expect?

A common offer is one to two weeks of pay for each year of service. Executives and negotiated packages often get four weeks or more per year. There is no legal minimum in most cases.

How is severance pay calculated?

Divide your annual salary by 52 for weekly pay, then multiply by your years of service and the weeks per year. Add any PTO payout or bonus. A plan may add a minimum or maximum number of weeks.

How is severance taxed?

It is taxed as ordinary wages. An employer may withhold federal income tax at a flat 22%, or 37% on supplemental pay above $1 million in a year, plus Social Security and Medicare, and state tax where it applies.

Why was so much taken out of my severance check?

Flat withholding is applied before your whole-year tax is known. Add Social Security, Medicare and state tax and the check can be 30% smaller than the gross amount, or more. You settle the difference when you file.

Can I take severance as a lump sum or as salary continuation?

Many employers allow either, and some decide for you. The total gross is the same, but continuation spreads income over time, can move part of it into next year and can affect unemployment benefits.

Does severance affect unemployment benefits?

In some states yes. Severance can delay benefits or be counted against them for the weeks it covers. Rules vary, so ask your state unemployment agency.

Is severance pay required by law?

Generally no. Federal law does not require it. It is owed only if a contract, plan or state rule says so. The WARN Act requires 60 days of notice for large layoffs, not severance pay.