Severance Pay Calculator

How the Severance Pay Calculator Works

Severance pay is a lump sum some employers offer when a job ends through a layoff, restructuring or mutual separation. This calculator estimates that lump sum from three inputs: your annual salary, your years of service, and the weeks of pay per year your employer or contract uses. You can also set an optional cap on the total number of weeks.

The Formula

The standard severance formula multiplies a weekly pay rate by a number of weeks based on tenure:

Weekly pay = annual salary ÷ 52 Severance = weeks per year × years of service × weekly pay

The “weeks per year” figure is the policy rate. One to two weeks per year of service is typical in the United States, but the exact number depends on your employer, your seniority and what you negotiate.

Worked Example

Suppose you earn a 60,000 dollar salary, have 8 years of service, and your employer offers 2 weeks of pay per year:

• Weekly pay = 60,000 ÷ 52 = 1,153.85 dollars
• Weeks of severance = 2 × 8 = 16 weeks
• Severance = 16 × 1,153.85 = 18,462 dollars (gross)

If a 12-week cap applied, the total would be limited to 12 × 1,153.85 = 13,846 dollars.

Common Weeks-Per-Year Rates

Policy rate	5 years	10 years	20 years
1 week/year	5 weeks	10 weeks	20 weeks
2 weeks/year	10 weeks	20 weeks	40 weeks
3 weeks/year	15 weeks	30 weeks	60 weeks

Many formal plans also apply a maximum number of weeks (for example, 26 or 52), which is why the calculator includes an optional cap.

What Severance Often Includes

A severance package can be more than the cash formula above. Depending on the employer it may also cover:

• Continued health insurance or a contribution toward COBRA premiums.
• Payout of unused vacation or PTO, sometimes separate from the severance figure.
• Outplacement support, bonuses or pro-rated equity, depending on the role.

Important Notes

• This is a gross estimate. Severance is taxed as supplemental wages, so your take-home amount will be lower after federal, Social Security, Medicare and any state withholding.
• Policies vary widely. Some employers pay a flat number of weeks regardless of tenure; others base it on a formula like the one here. Always check your offer letter, handbook or separation agreement.
• Severance is often negotiable, especially for senior roles or where you are asked to sign a release of claims.

This tool is for general estimation only and is not legal, tax or financial advice. Confirm any actual severance figure with your employer’s HR department or an employment attorney.