Severance Pay Calculator
Estimate severance from weekly pay and years of service, then see your take-home after the 22% federal supplemental rate, FICA, and state tax.
Severance Pay Calculator
Weekly Base Pay
Base pay only. Use your annual salary divided by 52, or your hourly rate times your usual weekly hours.
Years of Service
Enter fractional years like 7.5 if needed. Some policies round down to a whole year.
Weeks of Pay Per Year Worked
1 to 2 weeks per year is the standard band. Typing a custom value clears the chips.
Filing Status
Sets the Additional Medicare threshold used above the wage limit.
State Income Tax Rate (optional)
Leave at 0 if your state has no income tax. Otherwise enter your approximate state rate.
Optional Details
Prior wages let the $184,500 Social Security cap and the Additional Medicare threshold apply correctly. Leave at 0 to treat severance as the year's only wages.
Enter your weekly pay and years of service to see an estimate.
Estimates only, not tax or legal advice. This is a withholding estimate, not your final tax bill. Your actual tax is settled at filing and depends on your total year income, W-4, year-to-date wages, and state and local rules.
See Your Real Take-Home, Every Paycheck
ClockWage44's Hours Tracker logs each shift and runs federal tax, state tax, FICA, and overtime rules on-device to show your actual take-home. It is a quick way to sanity-check what "net" really means before and after a job change.
How severance pay is calculated
No federal law requires a private employer to pay severance or sets the amount. When it is offered, it usually follows a weeks-per-year-of-service formula: weekly base pay times years of service times a set number of weeks for each year worked. Where that weeks-per-year number lands is up to company policy, an employment agreement, or negotiation.
The standard band is 1 to 2 weeks of base pay per year of service, with more generous packages for senior and executive roles. The formula uses base pay only, so overtime, bonuses, and commissions are left out. If you had unused PTO or a separation bonus, add it in the optional field and it is paid on top of the formula amount.
Worked example: at $1,200 per week, 5 years of service, and 2 weeks per year, gross severance is $1,200 times 5 times 2, or $12,000, which works out to 10 total weeks of pay. Bump the policy to 3 weeks per year and the same tenure yields $18,000, or 15 weeks. The chips above let you line up a conservative, standard, and generous policy side by side.
How severance pay is taxed in 2026
The IRS classifies severance as supplemental wages, the same bucket as bonuses and commissions. Under the percentage method, employers withhold a flat 22% federal income tax on supplemental wages up to $1,000,000 in a calendar year, and a mandatory 37% on anything above $1,000,000. The calculator splits the math at the $1M line for you.
FICA applies too. Social Security is 6.2% on the amount up to the 2026 wage base of $184,500, so if earlier wages this year already used up the base, that row drops to zero. Medicare is 1.45% with no cap, and an extra 0.9% Additional Medicare kicks in once year-to-date wages pass the filing-status threshold ($200,000 single and head of household, $250,000 married filing jointly, $125,000 married filing separately). State income tax varies: nine states tax no wage income, while others apply a flat supplemental rate.
Here is the part that trips people up: the 22% is withholding, not your final tax. Your real tax gets calculated at filing against your full-year income and bracket. If your effective rate ends up below 22%, the gap comes back as a refund; if it is higher, you may owe more. You can compare the same supplemental-wage mechanics on a bonus with the Bonus Tax Calculator.
Lump sum vs. salary continuation and unemployment
Severance is paid one of two ways. A lump sum lands as a single payment at separation. Salary continuation keeps you on payroll for a set number of weeks, paid on the usual schedule. Withholding works out about the same either way, but the structure matters for unemployment: salary continuation can delay when benefits start, while a lump sum may not reduce them in some states. Rules differ by state, and you generally have to report severance when you file a claim.
If your last check also includes unpaid hours or PTO owed at separation, the Final Paycheck Calculator handles that piece, and the Net to Gross Calculator works backward from a target take-home. To keep a running take-home number tied to your actual shifts before and after a job change, the ClockWage44 Hours Tracker runs the same federal, state, and FICA math on-device. Download the app to keep the estimate attached to your real schedule.
Frequently Asked Questions
Common questions about severance pay calculator
How is severance pay calculated?
Most employers use a weeks-per-year-of-service formula: weekly base pay times years of service times a set number of weeks per year, usually 1 to 2. No federal law forces a private employer to pay severance or fixes the amount, so the terms come from company policy, your employment contract, or negotiation. The calculator above multiplies weekly pay by years of service by weeks per year, then adds any lump sum you enter.
Is severance pay taxed?
Yes. The IRS treats severance as taxable wages, so it is subject to federal income tax, Social Security, Medicare, and usually state income tax. Because it lands outside your normal paycheck, it counts as supplemental wages, which changes how federal income tax is withheld but not whether it is taxed.
How much tax is taken out of severance pay?
Under the IRS percentage method, employers withhold a flat 22% federal income tax on supplemental wages up to $1,000,000, plus 6.2% Social Security (up to the 2026 wage base of $184,500), 1.45% Medicare, and any state tax. That puts a typical package down roughly 30% to withholding before state tax. For a fuller net-pay picture, try the Take-Home Pay Calculator.
Is the 22% federal rate on severance my final tax?
No. The 22% is withholding, not your final tax bill. Your actual federal tax gets settled when you file, based on your full-year income and bracket. If your effective rate for the year lands below 22%, the difference comes back as a refund; if your marginal rate is higher, you may owe more at filing. Bonuses work the same way, which the Bonus Tax Calculator covers.
Do you pay Social Security and Medicare on severance?
Yes. Severance counts as FICA wages: 6.2% Social Security on the amount up to the 2026 wage base of $184,500, and 1.45% Medicare with no cap. An extra 0.9% Additional Medicare applies once your year-to-date wages cross the filing-status threshold ($200,000 single and head of household, $250,000 married filing jointly, $125,000 married filing separately).
Is severance paid as a lump sum or over time?
Either. Some employers pay a single lump sum at separation; others use salary continuation, keeping you on payroll for a set number of weeks. The withholding is similar either way, but the structure can affect the timing of unemployment benefits and when the money actually reaches you.
Does severance affect unemployment benefits?
It can, and it depends on your state and how the payment is structured. Salary continuation often delays unemployment benefits until the payments end, while a lump sum may not reduce them in some states. Either way, you generally have to report severance when you file a claim. Check your state's unemployment agency for the exact rule.
How many weeks of severance are typical?
A common band is 1 to 2 weeks of base pay per year of service, though senior and executive packages can run higher. The amount comes from employer policy or negotiation, not a federal formula. Use the weeks-per-year chips above to model a conservative, standard, or generous policy.