Calculate severance pay and what you keep after federal, FICA and state withholding. Covers private offers, federal RIF pay and the NJ legal floor.
An employer policy or offer letter. No US federal law requires severance, so this is arithmetic on what you were offered.
Leave the minimum or maximum blank if your policy has none. A blank maximum means no cap, not zero weeks.
Read this off your final pay stub. It decides how much Social Security wage base is left, and whether the extra Medicare rate applies. Blank assumes none, which withholds the most.
No US federal law requires severance pay — it comes from a contract, a policy or a negotiated agreement. What federal law does require is notice: the WARN Act gives 60 days' warning of a covered mass layoff or plant closing. New Jersey goes further and is the only state that mandates severance itself, at one week per full year of employment with 90 days' notice.
29 U.S.C. 2102 (WARN); N.J.S.A. 34:21-2, as amended effective 2023-04-10; 29 CFR 785 (FLSA does not mandate severance).
The IRS treats severance as supplemental wages: a flat 22% federal withholding, rising to 37% on supplemental wages above $1,000,000 in a calendar year. Social Security and Medicare come out as well — severance is wages for FICA. Withholding is not the tax you finally owe; that depends on your whole year, and a layoff often means less income than the flat rate assumes.
State supplemental rates verified 2026-08-04.
Estimates for educational purposes only. Severance is not required by US federal law — what you receive depends on your employer's policy or agreement, except where a state statute sets a minimum. Figures assume the terms entered are the ones your employer applies. Confirm with your employer, and with an employment lawyer before signing a release.
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A severance offer is quoted in gross dollars and weeks, but the number that matters is what reaches your account and how many months it covers. This calculator does both: it computes the weeks you are owed — from an employer policy, from the federal severance formula, or from New Jersey's statutory minimum — and then withholds the way an employer actually does, with a flat federal supplemental rate, Social Security, Medicare and your state's own supplemental rate. It also tells you the size of each paycheck if the severance arrives as salary continuation, which is not the total divided by a year.
Severance pay is money an employer pays when it ends your employment for reasons other than misconduct — a layoff, a reduction in force, a plant closing or a negotiated separation. In the private sector it is a contract term, not a legal right: no US federal statute requires it, and the Fair Labor Standards Act is silent on it. Federal civilian employees are the exception, with an entitlement written into 5 U.S.C. 5595 and computed under 5 CFR 550.707. New Jersey is the only state that mandates severance for private employers, at one week of pay per full year of employment on a covered mass layoff. Whatever the source, the payment is taxed as supplemental wages.
Severance formula
Turn 'sixteen weeks' into a net figure and a number of paychecks before you decide whether to negotiate or sign.
Compute the severance fund under 5 CFR 550.707, including the age adjustment that raises it by 2.5% for every full quarter you are over 40.
Compare an employer's offer against the statutory one week per full year, plus four weeks where notice was short.
See how many months of pay the package covers and how the paychecks are spaced, so you know when the money stops.
See exactly what federal, FICA and state withholding take, and why the 22% headline is not the whole deduction.
Change weeks per year, cap or payout method and watch the net and the runway move together.
Severance is a supplemental wage. The tool applies the flat 22% federal rate (37% above $1 million), Social Security up to the wage base, Medicare including the extra rate over $200,000, and your state's own supplemental rate — instead of asking you to invent one percentage.
Federal employees separated by a RIF have a statutory entitlement with a two-tier service schedule, a quarter-year fraction, an age adjustment and a 52-week lifetime cap. Generic calculators cannot express any of it.
If you were laid off in New Jersey in a covered mass layoff, the statute entitles you to one week per full year — and to four extra weeks if notice fell short. The calculator compares the offer against that floor and shows the shortfall.
Salary continuation pays your normal cheque for as many periods as the severance covers. The common error is dividing the total by the pay periods in a year, which understates each cheque two- to threefold.
Weeks and months of pay are stated directly, so you can line severance up against your job search rather than against a calendar year.
Each result carries the instrument behind it — the CFR section, the statute, or the IRS publication — so you can check the number rather than trust it.
The common private-sector formula is a number of weeks of pay for each year of service — most often one or two — multiplied by your weekly salary, sometimes with a minimum and a maximum. Weekly pay is your annual salary divided by 52. Any lump sum is added on top. Federal employees use a different, statutory formula.
There is no legal answer in the private sector, because severance is a contract term. One to two weeks per year of service is the common range, frequently capped at 26 weeks. Enter your policy's terms above to see the figure it produces, and the reference table shows what the same terms pay at other tenures.
An employer withholds a flat 22% for federal income tax, plus 6.2% Social Security up to the annual wage base and 1.45% Medicare, plus your state's supplemental rate. On a $30,000 severance in a state with no income tax, that is $6,600 federal and about $2,295 in FICA. Above $1 million of supplemental wages in a year, the federal rate on the excess is 37%.
Yes. IRS Publication 15 states it directly: severance payments are wages subject to social security and Medicare taxes, federal income tax withholding and FUTA tax. This is the deduction most severance calculators leave out, and it is roughly 7.65% of the payment unless your wages this year have already reached the Social Security wage base.
Because severance is a supplemental wage, and 22% is the optional flat rate an employer may apply to it. It is a withholding rate, not your tax rate. If the layoff cut your annual income, your actual rate may be lower and the difference comes back as a refund; if severance pushed you higher, you may owe more.
Under 5 CFR 550.707: one week of basic pay for each full year of creditable service through ten years, two weeks for each full year beyond ten, plus 25% of the applicable amount for each full three months past your final full year. That basic allowance is then increased by an age adjustment.
The basic severance allowance is increased by 2.5% for each full three months of age over 40. At exactly 50 that is forty quarters, a 100% increase — the allowance doubles. It is applied to the whole basic allowance, not to a single year.
Yes. The severance fund cannot exceed 52 weeks of pay, and that limit is for a lifetime: weeks of severance you have drawn before are subtracted, so a second entitlement is recomputed on all creditable service and current age and then reduced by what you already received.
Not by US federal law. The Fair Labor Standards Act does not require severance, so in the private sector it comes from a contract, a policy, a collective agreement or a negotiation. Federal civilian employees are entitled to it by statute, and New Jersey requires it of private employers in a covered mass layoff.
New Jersey, and only New Jersey. On a covered mass layoff its WARN act requires severance equal to one week of pay for each full year of employment, plus four additional weeks if the employer gave less than the required 90 days' notice. The employee receives the statutory amount or the employer's own severance, whichever is greater.
Both happen in the private sector, and the choice affects when the money lands rather than how much tax comes out. Federal severance is different: it must be paid in installments at the same pay-period intervals your salary would have been paid, unless a law expressly authorises a lump sum.
Often, and it depends on the state and on how the payment is characterised. Some states treat severance as wages that delay or reduce benefits for the weeks it covers; others disregard it entirely, particularly for a genuine lump sum. Check your state's unemployment agency before assuming you can claim immediately.
One to two weeks per year of service is the usual private-sector range, often with a floor of two to four weeks and a cap between 26 and 52. Senior roles negotiate more, sometimes expressed in months rather than weeks. None of this is a legal entitlement — it is what employers commonly write into their policies.
Usually, because severance is contractual. Weeks of pay, the payout method, continued health coverage, unused leave and the terms of the release are all negotiable in principle. Since signing typically waives your claims, the amount is worth checking against what those claims might be worth before you agree.