How is severance pay calculated?

Most U.S. severance packages use a simple formula: a number of weeks of pay for every year of service — typically one to two weeks per year, sometimes capped at a maximum (for example 26 weeks). Example: $85,000 salary is about $1,635/week; with 5 years of service at 2 weeks per year, that's 10 weeks, or roughly $16,350 gross. Senior roles and negotiated agreements can be higher. The SeveranceWorth calculator lets you plug in your own salary, tenure, and policy.

Is severance pay taxed like a bonus?

Yes. The IRS treats severance as 'supplemental wages', the same category as bonuses. When paid separately from regular wages, employers typically withhold a flat 22% for federal income tax (37% on any amount over $1 million), plus Social Security (6.2% up to the annual wage base) and Medicare (1.45%), plus any state income tax. Withholding is not your final tax bill — your actual tax is settled when you file your return.

Can I collect unemployment benefits and severance at the same time?

It depends on your state and on how the severance is paid. In many states a one-time lump sum does not block unemployment benefits, while 'salary continuation' severance (staying on payroll for X weeks) can delay eligibility until the payments end. Some states reduce benefits dollar-for-dollar during the severance period. File for unemployment right away regardless — your state agency will tell you when benefits start.

Is my employer required to pay severance?

In most cases, no. U.S. federal law (the FLSA) does not require severance pay. You are generally entitled to it only if your employment contract or offer letter promises it, the company has an established written severance policy, a union agreement covers it, or it is offered in exchange for signing a release of claims. Employers do owe your final paycheck and accrued PTO where state law requires it.

What is the WARN Act?

The federal WARN Act requires employers with 100 or more full-time employees to give 60 days' written notice before a mass layoff or plant closing. If proper notice isn't given, affected workers may be entitled to up to 60 days of back pay and benefits. Several states (like California and New York) have stricter 'mini-WARN' laws covering smaller employers. WARN pay is separate from — and can be in addition to — severance.

How much does COBRA cost per month?

Under COBRA you pay the entire premium — the share you paid as an employee plus everything your employer was covering — plus an administrative fee of up to 2%. Because employers typically cover 70–80% of the premium, COBRA often costs 4–5x what came out of your paycheck: commonly $600–$800+/month for individual coverage and $1,800–$2,400+/month for family coverage. Always compare against ACA marketplace plans at healthcare.gov before electing.

Can I negotiate my severance package?

Often, yes — especially when you're asked to sign a release of legal claims, which is what the company is paying for. You can ask for more weeks of pay, payment of your COBRA premiums for several months, an extended exercise window on stock options, vesting of near-term equity, a neutral reference, and outplacement support. You typically have at least 21 days to consider a release if you're over 40 (ADEA), so don't sign on the spot.

Does SeveranceWorth store my salary information?

No. Every calculator runs entirely in your browser. The numbers you type — salary, savings, expenses, premiums — are never transmitted, stored, or seen by anyone. There is no backend, no database, and no account. Refresh the page and everything is gone.

About SeveranceWorth

What this site is

SeveranceWorth is a free toolkit for people who were just laid off in the United States. It answers the four financial questions that hit hardest in the first week: how much severance you should expect under a typical policy, what withholding will take out of it, how many months the money will actually last, and what COBRA health coverage will cost once the employer subsidy disappears. Everything is on one page, with the formulas shown, and results you can copy or download as a plain-text summary.

Why it's built the way it is

Salary, savings, and monthly expenses are among the most sensitive numbers a person has — and the moment after a layoff is exactly when people are most vulnerable to lead-generation sites that trade "free calculators" for an email address and a sales call.

So SeveranceWorth runs entirely in your browser. There is no backend, no database, no account system, and no form that submits anywhere. The numbers you type are used for arithmetic on your own device and nothing else. This isn't a promise you have to take on faith — it's how the site is physically built. You can verify it yourself: open your browser's network tab and watch — no requests carry your inputs.

How the site stays free

Two ways: advertising served by Google AdSense, and optional cryptocurrency donations. That's the entire business model. There is no premium tier, no affiliate steering toward particular financial products, and nothing to buy. The site costs very little to run, so it doesn't need to extract anything from you to keep existing.

What this site is not

SeveranceWorth provides estimates for informational purposes only — it is not legal, tax, or financial advice, and using it doesn't create any professional relationship. Severance terms are set by your employer or your agreement; tax withholding is not your final tax bill; COBRA rates come from your plan administrator. For decisions with real stakes — signing a separation agreement, tax planning around a large payment, choosing health coverage — talk to an employment attorney, a tax professional, or a licensed advisor.

Contact

Corrections, suggestions, advertising inquiries, or anything else: brusmarvy@gmail.com. Also see the privacy policy.