How is severance taxed?

In the U.S., severance is usually treated as supplemental wages. The IRS default flat federal withholding for supplemental wages is 22% for amounts up to $1M. Social Security, Medicare, and state taxes still apply. The 22% row here is that flat federal rate only — your total tax bill can be higher or lower.

Lump sum or continuation — does it matter?

For total dollars, no. For timing and unemployment eligibility, yes. Some states delay unemployment benefits while continuation payments run; a lump sum can start the clock sooner. Check your state.

What if I have equity vesting?

This calculator estimates cash severance only. Unvested equity, bonuses, and post-termination exercise windows should be reviewed separately as part of any negotiation.

Severance package calculator

Estimate what you'd get — or evaluate what you were offered — in ninety seconds.

Years of service

Monthly gross salary

Weeks of severance per year of service

Payout structure

Unused PTO days

Monthly COBRA premium

Optional

Expected months to next job

Monthly living costs

Default 60% of salary ($4,800.00)

State

PTO payout and unemployment rules vary by state — check your state labor department.

Estimate

Severance estimate

$36,923.08

Fed. withholding (22%)

− $8,123.08

IRS supplemental-wage default. State tax, Social Security, Medicare not included.

After federal withholding

$28,800.00

PTO payout estimate

$0.00

COBRA cost over gap

− $0.00

Net cash cushion

$36,923.08

Runway

≈ 7.7 months

of runway at your current living costs.

Severance is not legally required in most U.S. private-sector jobs; formulas vary by employer. PTO payout and unemployment rules vary by state.

You just did the hardest part: you looked at it straight.

Severance by state

Keep going

Get the Kit — the 30-day plan for what happens next →How to negotiate severance →How severance pay works →Write your counter-offer letter →

How this severance calculator works

Severance in most U.S. private-sector jobs is not required by law. Employers offer it as part of a separation package, and the informal industry norm is one to four weeks of pay per year of service. This calculator uses that norm as its starting point.

Estimate mode

Enter tenure, salary, and a weeks-per-year assumption. We compute weekly pay as (monthly salary × 12) ÷ 52, then severance as years × weeks × weekly pay. PTO payout uses days × daily rate, where daily rate is (monthly salary × 12) ÷ 260 working days.

Evaluate-my-offer mode

Enter what you were offered. We back-solve it into weeks-per-year and show it against the 1–4 weeks/yr benchmark bar. This is the frame most negotiators use — if your offer implies less than 1 week/yr for your tenure, you have room to counter.

Federal withholding row

The 22% federal supplemental-wage rate is the IRS default for supplemental payments up to $1M. It's a withholding rate, not your final tax bill. State income tax, Social Security, and Medicare still apply and are not shown.

What it isn't

An estimate, not a guarantee. Severance is negotiable. Bonuses, unvested equity, non-competes, and state-specific rules all affect the real number. Bring this figure to the counter-offer conversation as a floor, not a ceiling.

FAQ

In most private-sector U.S. jobs, no. Employers may offer it as part of a separation agreement, and terms vary widely. Some states and situations (like a WARN Act layoff) have specific rules.

Glidepath provides general information and document tools, not legal, financial, or tax advice. Employment rules vary by state and country. For advice about your situation, consult a licensed professional.