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 New York?

Yes — and heavily withheld. New York State takes a flat 11.7% on supplemental wages like severance, plus the 22% federal supplemental rate, Social Security, and Medicare. NYC residents add city withholding (~4.25%). Your actual tax is settled on your return and may be lower if your year's income drops.

Does New York have a WARN Act?

Yes, and it's stricter than the federal one: employers with 50+ full-time employees must give 90 days' written notice before mass layoffs (25+ full-time workers who are a third of the site, or 250+ regardless) or closings. Missing notice can mean back pay for the shortfall.

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

It depends on timing and amount. If weekly severance exceeds New York's maximum weekly benefit rate and payments begin within 30 days of your last day, you can't collect unemployment during the severance. If payments start later than 30 days out or fall below the cap, benefits are generally unaffected.

Is my New York employer required to pay severance?

No. New York doesn't mandate severance — it comes from your contract, the employer's policy, or a negotiated separation agreement. New York's WARN Act can, however, create back-pay liability if notice rules were broken, which is separate money from severance.

Severance Pay Calculator for New York (2026)

Severance Pay Calculator — New York

New York doesn't mandate severance pay, but it wraps a layoff in more state law than almost anywhere else: a WARN Act that demands 90 days' notice (not the federal 60), one of the highest state withholding rates on severance in the country, and an unusual 30-day timing rule that can decide whether you collect unemployment at all while severance is coming in.

Estimate your package below, then use the tax tab with New York's 11.7% supplemental rate — the state bite here is real, and it's better to see it now than on the check stub.

How New York taxes severance

New York withholds a flat 11.7% state tax on supplemental wages like severance — among the highest in the country — on top of the 22% federal supplemental rate, Social Security, and Medicare. New York City residents pay city withholding (roughly 4.25%) as well, and Yonkers has its own surcharge. As everywhere, withholding is an estimate: your real liability is computed on your return from full-year income.

New York's layoff-notice (WARN) law

New York's WARN Act is significantly stronger than the federal law: it covers private employers with 50 or more full-time employees (federal needs 100+) and requires 90 days' written notice — not 60 — before a plant closing or a mass layoff affecting 25+ full-time employees (if they're at least a third of the site's workforce) or 250+ employees regardless of percentage. Failure to give notice can mean back pay and benefits for the shortfall period, separate from any severance offer.

Severance and unemployment benefits in New York

New York has a specific timing rule: if your weekly severance amount exceeds the state's maximum weekly benefit rate and the payments start within 30 days of your last day of work, you're not eligible for unemployment while receiving the severance. If severance starts more than 30 days after your termination — or the weekly amount is below the cap — benefits are generally unaffected. This makes the payment schedule in your agreement worth reading closely. File with the NY DOL right away either way.

Severance Pay Calculator — New York

How New York taxes severance

New York's layoff-notice (WARN) law

Severance and unemployment benefits in New York

Severance questions in New York

Severance calculators for other states