Use this severance pay calculator to estimate your package from weekly pay, years of service, and weeks per year, plus unused PTO payout and monthly equivalent.
Severance Pay Formula
The most common severance formula multiplies your weekly pay by the number of severance weeks you are offered, and the number of weeks is your years of service times a weeks-per-year rate:
SP = W * (Y * WY)
If your employer also pays out unused PTO, each day is paid at your daily rate, and the payout is added on top:
PTO = (W / 5) * D Total = SP + PTO
Variables:
- SP is the gross severance pay, in dollars, before taxes and deductions
- W is your weekly pay. From an annual salary, W = salary / 52; from an hourly wage, W = hourly rate * hours per week
- Y is your years of service with the employer (decimals allowed, e.g. 6.5 years)
- WY is the weeks of severance offered per year of service, commonly 1 to 2 in the US
- D is the number of unused PTO days paid out at the daily rate of W / 5
Start by choosing how your pay is entered: annual salary, weekly pay, or an hourly wage with hours per week. The calculator converts whichever figure you enter into a weekly pay amount, then multiplies it by your severance weeks. Enter your years of service and the weeks of severance offered per year of service, which defaults to 2. The advanced options let you apply a cap on total severance weeks and add unused PTO days to the payout.
Typical US severance packages offer 1 to 2 weeks of pay per year of service, and many employer policies cap the total at a fixed number of weeks such as 26 or 52. Longer-tenured employees and managers often land at the higher end of that range, while executives frequently negotiate larger packages, sometimes months of pay, through employment agreements. Severance is usually offered in exchange for signing a release of claims, so review any agreement carefully before accepting.
Severance Weeks and Pay by Years of Service
This table shows severance weeks at 1 and 2 weeks per year of service for 1 to 20 years, along with the resulting gross severance for an employee earning $1,500 per week (a $78,000 salary).
| Years of service | Weeks at 1 wk/yr | Weeks at 2 wk/yr | Pay at 1 wk/yr | Pay at 2 wk/yr |
|---|---|---|---|---|
| 1 | 1 | 2 | $1,500 | $3,000 |
| 2 | 2 | 4 | $3,000 | $6,000 |
| 3 | 3 | 6 | $4,500 | $9,000 |
| 4 | 4 | 8 | $6,000 | $12,000 |
| 5 | 5 | 10 | $7,500 | $15,000 |
| 6 | 6 | 12 | $9,000 | $18,000 |
| 7 | 7 | 14 | $10,500 | $21,000 |
| 8 | 8 | 16 | $12,000 | $24,000 |
| 9 | 9 | 18 | $13,500 | $27,000 |
| 10 | 10 | 20 | $15,000 | $30,000 |
| 11 | 11 | 22 | $16,500 | $33,000 |
| 12 | 12 | 24 | $18,000 | $36,000 |
| 13 | 13 | 26 | $19,500 | $39,000 |
| 14 | 14 | 28 | $21,000 | $42,000 |
| 15 | 15 | 30 | $22,500 | $45,000 |
| 16 | 16 | 32 | $24,000 | $48,000 |
| 17 | 17 | 34 | $25,500 | $51,000 |
| 18 | 18 | 36 | $27,000 | $54,000 |
| 19 | 19 | 38 | $28,500 | $57,000 |
| 20 | 20 | 40 | $30,000 | $60,000 |
Example Problems
Example 1: Salaried employee.
You earn a $78,000 annual salary and are laid off after 6 years. Your employer offers 2 weeks of severance per year of service. First find weekly pay: W = 78,000 / 52 = $1,500. Severance weeks = 6 * 2 = 12 weeks.
SP = 1,500 * 12 = $18,000 gross severance. Spread over the 12 weeks it replaces, that works out to a monthly equivalent of $6,500 while it lasts.
Example 2: Hourly employee with PTO payout.
You earn $25 per hour and work 40 hours per week, so W = 25 * 40 = $1,000. You have 3.5 years of service and are offered 1 week per year, so severance weeks = 3.5 * 1 = 3.5, and SP = 1,000 * 3.5 = $3,500.
You also have 4 unused PTO days. The daily rate is 1,000 / 5 = $200, so PTO = 200 * 4 = $800, and the total package = 3,500 + 800 = $4,300 gross.
Frequently Asked Questions
Is severance pay required by law?
Generally no. In the US, no federal law requires employers to pay severance, and most employment is at-will, so severance is a matter of company policy, an employment contract, or negotiation. The main exceptions are the WARN Act, which requires 60 days of advance notice (or pay covering that period in practice) for qualifying mass layoffs and plant closings at larger employers, and any severance promised in a written agreement or established plan, which becomes enforceable once promised.
How is severance pay taxed?
Severance is taxed as supplemental wages. If it is paid separately from regular wages, employers typically withhold federal income tax at the flat 22 percent supplemental rate (37 percent on amounts over $1 million in a year), plus Social Security and Medicare taxes and any state withholding. Your final tax bill depends on your total income for the year, so the flat withholding may be more or less than what you ultimately owe.
Does severance affect unemployment benefits?
It varies by state. Some states pay unemployment benefits alongside severance, while others delay or reduce benefits until the severance period ends, especially when severance is paid as salary continuation rather than a lump sum. Report any severance when you file your claim, and check your state unemployment office’s rules so you know when benefits will start.
