Severance Pay Calculator

Estimate what your employer might offer — based on the common formula of weeks of pay per year of service, plus payout for unused PTO days.

Important: severance is not required by law

No federal law requires employers to offer severance pay — it is entirely a matter of company policy, employment contract, or negotiation. This calculator uses the common "weeks of pay per year of service" formula to produce an estimate only. It is not legal or tax advice. If you are negotiating a separation agreement, consider consulting an employment attorney.

Pay typeWeekly pay ($)Years of serviceUnused PTO days (optional)Weeks of pay per year of service: 2(common range is 1–2; executives sometimes get more)Estimated tax withholding on payout (%)

Your estimated severance

Severance pay (10 weeks): $12,000.00
Unused PTO payout: $0.00
Total before tax: $12,000.00
Est. after tax (withholding 22%): $9,360.00

Based on $1,200.00/week · 5 years of service. After-tax figure is a rough withholding estimate, not tax advice.

How the estimate works

Weekly pay — enter it directly, or enter your annual salary and we divide by 52.
Severance — weekly pay × weeks-per-year × years of service (the industry-standard formula; most companies offer 1–2 weeks per year).
PTO payout — daily rate (weekly pay ÷ 5) × unused PTO days. Some states require PTO payout by law; others leave it to company policy.
After-tax figure — a rough estimate using the withholding rate you enter. Actual tax depends on your total income and W-4.

Severance pay FAQs

How is severance pay calculated?

Most employers use a simple formula: 1–2 weeks of pay for every year of service, sometimes with a minimum and a cap. Executives may negotiate more.

Is severance pay required by law?

No. Federal law (including the FLSA) does not require severance pay. A few states regulate specific situations, but for most workers it depends on company policy or a separation agreement.

Is severance pay taxed?

Yes. Severance is taxed as ordinary wages — federal income tax, Social Security, and Medicare all apply. Employers typically withhold at the supplemental wage rate (currently a flat 22% federal for amounts under $1 million).

Estimates only — not tax or legal advice. Verify with your employer or a tax professional.