Your Employment Details
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Severance Estimate
Estimated Gross Severance
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Weeks of Severance—
Weekly Salary—
Federal Income Tax (22%)—
State Income Tax—
FICA Taxes (7.65%)—
Estimated Net Severance—
Severance is taxed as ordinary income. Federal withholding on supplemental pay is 22% flat. Consult an employment attorney if you have concerns about your severance package.
Understanding Severance Pay
Severance pay is compensation offered by an employer when terminating an employee — usually in exchange for signing a separation agreement and releasing legal claims. It is not legally required in most US states (no federal law mandates it), but many employers offer it as a standard practice or to avoid potential lawsuits.
Common Severance Formulas
- 1–2 weeks per year of service: Most common formula for mid-level employees
- 1 month per year: More generous, often for senior employees or executives
- Flat amounts: Some companies offer fixed amounts regardless of tenure
- Minimum 2 weeks: Many policies specify a floor regardless of years served
What to Negotiate Beyond the Check
- Health insurance continuation (COBRA coverage or employer paying premiums)
- Vesting acceleration on equity or 401(k)
- Non-disparagement and reference letter terms
- Outplacement services
- Extended bonus eligibility for current-year work
Frequently Asked Questions
Can I collect unemployment while receiving severance? ▼
It depends on your state. Some states reduce unemployment benefits dollar-for-dollar while receiving severance paid in a lump sum. Others allow full unemployment if the severance is a one-time payment. States like California, New York, and Texas treat lump-sum severance differently from salary continuation. Check your state's unemployment agency website for the specific rules.
Do I have to sign a release to get severance? ▼
Usually yes — employers typically require signing a separation agreement that releases legal claims (discrimination, wrongful termination, etc.) in exchange for severance. You are NOT required to sign immediately. Federal law (the Older Workers Benefit Protection Act) requires at least 21 days to consider a severance agreement for workers over 40, plus 7 days to revoke after signing. Consider consulting an employment attorney before signing, especially if you believe you were wrongfully terminated.