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.

Is severance taxed in Illinois?

Yes, at the state's flat 4.95% rate, withheld alongside the 22% federal supplemental rate, Social Security, and Medicare. Total withholding on a typical Illinois severance check lands in the mid-30% range.

Does Illinois have a WARN Act?

Yes. Illinois WARN covers employers with 75+ full-time employees and requires 60 days' notice for mass layoffs (25+ full-timers who are a third of the site, or 250+) and closings affecting 50+. It reaches smaller employers than the federal law.

Can I get unemployment and severance at the same time in Illinois?

Yes. IDES does not count severance against unemployment benefits — you can receive both simultaneously. Vacation payouts and pay in lieu of notice follow different rules, so report everything accurately and let IDES classify it.

Severance Pay Calculator for Illinois (2026)

Severance Pay Calculator — Illinois

Illinois doesn't require severance pay, but it's a relatively worker-friendly state to be laid off in: its mini-WARN law reaches smaller employers than the federal act, its flat 4.95% income tax is easy to predict, and — importantly — the Illinois Department of Employment Security does not subtract severance from unemployment benefits.

Estimate your package below, then check the tax tab with 4.95% as the state rate to see what an Illinois severance check actually delivers after withholding.

How Illinois taxes severance

Illinois taxes all income — severance included — at a single flat rate of 4.95%, and employers withhold that same 4.95% on supplemental wages. Combined with the 22% federal supplemental rate, Social Security, and Medicare, expect roughly 34–35% withheld from a typical Illinois severance check. The flat rate means the withholding here tracks your final Illinois liability more closely than in graduated-rate states.

Illinois's layoff-notice (WARN) law

The Illinois WARN Act covers employers with 75 or more full-time employees (federal WARN needs 100+) and requires 60 days' written notice before a mass layoff of 25+ full-time employees making up at least a third of the site's workforce, 250+ employees regardless of percentage, or a plant closing affecting 50+. Employers who skip notice can owe back pay and benefits for the shortfall — money that's separate from any severance offer on the table.

Severance and unemployment benefits in Illinois

Illinois is one of the states where severance and unemployment coexist cleanly: IDES does not treat severance pay as wages, so it neither delays nor reduces your benefits — you can collect both at once. Be careful with the neighboring categories, though: vacation-pay payouts and pay in lieu of notice are treated differently and can affect specific weeks. File your IDES claim in the first week after the layoff.

Severance Pay Calculator — Illinois

How Illinois taxes severance

Illinois's layoff-notice (WARN) law

Severance and unemployment benefits in Illinois

Severance questions in Illinois

Severance calculators for other states