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 Pennsylvania?

Yes — at PA's flat 3.07%, the lowest flat state income tax in the country, plus any local earned-income tax (often ~1%), on top of federal supplemental withholding, Social Security, and Medicare. Total withholding usually lands just above 33%.

Does Pennsylvania have a WARN Act?

No state version. Federal WARN still covers Pennsylvania employers with 100+ full-time employees: 60 days' notice before mass layoffs or closings, with back-pay liability for violations.

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

Often yes. PA only offsets the portion of severance above 40% of the statewide average annual wage (roughly the low-$30,000s, adjusted yearly). Below that threshold, severance doesn't reduce benefits; above it, the excess is allocated weekly and deducted. File right away and let the UC office run the math.

Severance Pay Calculator for Pennsylvania (2026)

Severance Pay Calculator — Pennsylvania

Pennsylvania doesn't require severance pay and has no state layoff-notice law, but it has two features worth knowing before you plan around a package: the lowest flat income tax of any state that has one (3.07%), and a distinctive unemployment-compensation offset that only kicks in when severance is large — small and mid-sized packages typically don't touch your benefits at all.

Estimate your package below, then use 3.07% as the state rate on the tax tab. If your severance is on the larger side, read the unemployment section — Pennsylvania's threshold rule decides how much of it counts against benefits.

How Pennsylvania taxes severance

Pennsylvania taxes severance at its flat 3.07% rate — the lowest flat income tax in the country — withheld alongside the federal 22% supplemental rate, Social Security, and Medicare. Many Pennsylvania municipalities and school districts also levy a local earned-income tax, commonly around 1% (Philadelphia's wage tax is higher), so your locality can add a bit to the state figure.

Layoff notice in Pennsylvania: federal WARN only

Pennsylvania has no state mini-WARN law — only the federal WARN Act applies: employers with 100+ full-time employees owe 60 days' written notice before a plant closing or mass layoff of 50+ at a single site. If a large PA employer gave no notice in a qualifying layoff, up to 60 days of back pay may be owed, separate from severance.

Severance and unemployment benefits in Pennsylvania

Pennsylvania uses a threshold formula unique among big states: only the portion of your total severance that exceeds 40% of the state's average annual wage (a figure in the low-$30,000s, adjusted each year) is deducted from unemployment compensation, allocated week by week at your former full-time weekly wage. In practice, packages under roughly $30,000 usually don't reduce PA benefits at all, while a large package delays them for some weeks. File your UC claim immediately — the department applies the formula for you.

Severance Pay Calculator — Pennsylvania

How Pennsylvania taxes severance

Layoff notice in Pennsylvania: federal WARN only

Severance and unemployment benefits in Pennsylvania

Severance questions in Pennsylvania

Severance calculators for other states