Estimate your severance package after layoffs or termination
Enter your salary, years of service, and other details above, then click Calculate to estimate your severance package.
Estimate your severance package after layoffs or termination. Calculate gross severance pay, estimated taxes, PTO payout, and total exit compensation.
Formula: Gross Severance = (Annual Salary ÷ 52) × Weeks Per Year × Years of Service. Net severance = Total compensation minus estimated taxes.
Employee with $75,000 salary, 5 years of service:
Our Severance Pay Calculator follows a systematic process to estimate the total compensation you may receive after a layoff or termination. It factors in your salary, years of service, employer's severance policy, and additional benefits to give you a comprehensive picture of your exit package.
Enter Your Annual Salary
Your gross annual salary before taxes is the starting point. The calculator divides this by 52 to determine your weekly compensation rate.
Set Years of Service and Multiplier
Enter how long you have worked for your employer and your expected weeks of severance per year of service — typically 1 or 2 weeks. The calculator multiplies these to determine gross severance.
Include Additional Compensation
Add any bonuses, unused PTO hours, and other exit benefits. The calculator values PTO at your hourly rate and adds bonuses and other compensation to the total package.
Apply Tax Withholding
The calculator applies your estimated tax rate to account for federal, state, and FICA withholding. This shows you the net amount you will actually receive in your pocket.
Review Your Total Exit Package
The results page shows gross severance, PTO payout, bonus compensation, tax estimate, net payment, and total before-tax package — plus visual charts and detailed breakdowns.
The calculator updates instantly when you change any input, allowing you to experiment with different scenarios — such as negotiating additional weeks of severance or estimating the impact of a higher tax rate — so you can walk into negotiations fully informed.
Severance pay is financial and benefits compensation that an employer provides to an employee whose job is eliminated through no fault of their own. It serves as a bridge between employment and the next opportunity, giving you financial runway while you search for a new position. Severance packages typically include a lump sum cash payment, continued health insurance benefits, outplacement services, and payout of accrued but unused vacation time.
Employers offer severance for several reasons. First, it maintains goodwill and protects the company's reputation during difficult transitions. Second, severance serves as consideration in exchange for signing a separation agreement that typically includes a release of legal claims against the employer. This means you give up your right to sue in exchange for the severance package. Third, severance helps retain and motivate remaining employees by demonstrating that the company treats departing staff fairly.
It is important to understand that severance pay is not the same as your final paycheck. Your final paycheck covers wages and compensation earned up to your last day of employment — including your final week's pay, commissions already earned, and reimbursable expenses. Severance is additional compensation provided beyond what you have already earned, and it comes with legal strings attached through the separation agreement.
Legally, severance pay is not required under US federal law. The Fair Labor Standards Act does not mandate severance, and no federal statute requires employers to provide it. However, severance may be required by your employment contract, company policy, or state law in certain circumstances. Some states like New York have specific rules about severance timing, and the WARN Act requires advance notice for mass layoffs. In other countries like Canada, the UK, and Australia, minimum severance or redundancy pay is legally mandated.
For employees, severance provides critical financial stability during the job search process. It covers living expenses, health insurance, and other costs while you find your next role. Beyond the cash value, severance packages often include valuable non-cash components like extended health coverage, career counseling, resume writing services, and job placement assistance. Understanding the full value of your severance package — not just the cash component — is essential for making informed decisions about your separation agreement.
In 2026, with ongoing economic shifts and corporate restructuring across industries, knowing your severance rights and understanding how packages are calculated has never been more important. Whether you are facing an imminent layoff or preparing for the possibility, arming yourself with knowledge is the best way to ensure you receive fair treatment and maximum compensation.
Severance pay follows a straightforward formula that starts with your weekly salary and applies your employer's severance multiplier. Here is the complete calculation broken down step by step:
Weekly Salary = Annual Salary ÷ 52
Gross Severance = Weekly Salary × Weeks Per Year × Years of Service
Total Before Tax = Gross Severance + Bonus + PTO Payout + Other Benefits
Net Severance = Total Before Tax − Estimated Tax Withholding
PTO Payout
Unused PTO Hours × Hourly Rate
Tax Withholding
Total Before Tax × Tax Rate %
Total Exit Package
Total Before Tax − Estimated Tax
Weekly Equivalent
Gross Severance ÷ Weeks of Coverage
This worked example demonstrates how severance pay is calculated for a typical employee using our calculator.
Scenario: Marketing Manager with 8 Years of Service
Input Values
Calculation Results
Step-by-step breakdown:
Key Takeaway
This marketing manager's gross severance is $13,077 (about 1.5 months of salary), but the total exit package reaches $21,981 when PTO and bonus are included. After 25% tax withholding, they receive approximately $16,486 in net compensation, providing roughly 10 weeks of income replacement during their job search.
Several factors influence the size and structure of your severance package. Understanding these can help you evaluate an offer and identify negotiation opportunities.
Each employer has its own severance policy. Large corporations typically have formal written policies that apply uniformly, while smaller companies handle severance on a case-by-case basis.
Your offer letter, employment agreement, or employee handbook may specify exact severance terms. Contractual provisions generally govern your entitlement and calculation method.
Some jurisdictions mandate minimum severance. US states like California and New York have specific rules. Canada's ESA provides statutory minimums. UK law requires minimum statutory redundancy pay.
Tenure is the primary factor in most severance formulas. Longer-serving employees receive proportionally more severance. Most companies require 6–12 months minimum before eligibility.
Higher-paid employees typically receive larger absolute severance amounts. Executive packages often use monthly rather than weekly multipliers and include additional perks like equity acceleration.
Earned but unpaid bonuses, prorated annual bonuses, and retention bonuses may be included in your severance package. Executive severance often guarantees bonus amounts.
Unused vacation and PTO hours are typically paid out separately from severance. Several states legally require employers to pay accrued vacation time upon termination regardless of policy.
Layoffs and reductions in force (RIFs) almost always qualify for severance. Termination for cause, misconduct, or poor performance generally disqualifies you from receiving severance.
Severance rules vary significantly around the world. Some countries mandate minimum payments by law, while others leave it entirely to employer discretion.
Review the Agreement Carefully
Read every page of the separation agreement before signing. Pay special attention to the release of claims, non-compete clauses, confidentiality provisions, and any clauses that affect your future employment options.
Understand Tax Implications
Severance is taxed as ordinary income at your marginal rate. The 22% supplemental withholding may not cover your full tax bill. Consider how the lump sum affects your annual tax bracket and plan accordingly.
Check Benefits Continuation
Health insurance is often the most valuable non-cash benefit. Determine if your employer will pay COBRA premiums and for how long. Factor in the cost of replacing coverage when evaluating your offer.
Negotiate If Appropriate
Most severance offers are opening bids, not final offers. Common negotiation points include additional weeks of pay, extended benefits, outplacement services, and equity treatment. The employer expects some back-and-forth.
Consult an Employment Lawyer
For packages over $10,000 or if you suspect discrimination, an employment attorney's review is worth the investment. They can identify hidden risks, negotiate improvements, and ensure your rights are protected.
Document Everything
Save all correspondence, performance reviews, and employment documents. These can support your leverage during negotiations and may be important if you need to challenge the terms or timing of your termination.
Remember: You typically have 21 to 45 days to review a severance agreement under federal law (depending on your age and circumstances). Take this time to fully understand the terms, consult with professionals, and negotiate confidently before signing.
The Severance Pay Calculator is provided for informational and educational purposes only. It produces estimates based on common severance formulas and typical tax withholding rates, and should not be considered as professional legal advice, tax guidance, or a substitute for consultation with qualified professionals.
Employment laws vary significantly by country, state, and municipality. Severance policies differ by employer, industry, and individual employment contracts. This calculator may not account for all applicable laws, contractual provisions, collective bargaining agreements, or special circumstances that could affect your actual severance entitlement.
We strongly recommend consulting with an employment attorney or qualified HR professional before signing any separation agreement or making decisions based on these estimates. Tax laws are complex and subject to change — consult a tax professional for accurate withholding and liability calculations specific to your situation.
By using this calculator, you acknowledge that Measurely and its operators assume no liability for any losses, damages, or decisions made based on the calculations provided.