Severance Pay Calculator (2026)
Severance pay is commonly one to two weeks of pay per year of service, though private employers are not legally required to offer it. For tax, severance is a supplemental wage: federal withholding is a flat 22% (on amounts up to $1M), plus 7.65% FICA and any state tax. On a $30,000 package, roughly $8,900 is withheld, leaving about $21,100. Enter your pay and tenure below to estimate the gross and after-tax amount.
How is severance pay calculated?
A common formula is one to two weeks of pay per year of service, though there is no federal legal minimum in the private sector. Your package depends on company policy or your agreement.
How is severance taxed?
Severance is a supplemental wage. Federal withholding is a flat 22% on amounts up to $1 million, plus 7.65% FICA and any state tax.
Is severance pay taxed differently?
It is withheld at the 22% supplemental rate, but it is ordinary income at tax time, so your final tax depends on your total income for the year.
Does severance affect unemployment?
It can. Some states delay or reduce unemployment benefits while you receive severance, so check your state's rules.
How is severance pay calculated?
There is no federal law requiring severance for private-sector employees, so the amount comes from company policy, an employment contract, or a negotiated separation agreement. The most common formula is a set number of weeks of pay for each year of service.
- Find your weekly pay (annual salary divided by 52).
- Multiply by the weeks granted per year of service (often 1-2).
- Multiply by your years of service to get the gross severance.
- Subtract supplemental withholding, FICA and state tax for the net.
How is severance pay taxed in 2026?
The IRS treats severance as supplemental wages. If your employer pays it separately, they withhold a flat 22% for federal tax on amounts up to $1 million. Social Security and Medicare (7.65%) also apply, as does state income tax in most states. The table shows the split on a few package sizes.
| Gross severance | Federal 22% | FICA 7.65% | Net (no state) |
|---|---|---|---|
| $15,000 | $3,300 | $1,148 | $10,552 |
| $30,000 | $6,600 | $2,295 | $21,105 |
| $60,000 | $13,200 | $4,590 | $42,210 |
Is the 22% the final tax on severance?
No. The 22% is withholding, not your final tax. Severance is ordinary income, so when you file, it is taxed at your actual marginal rate based on your total income for the year. If your top rate is above 22% you may owe more; if it is below, you may get some back. A large package can push part of your income into a higher bracket.
Does severance affect unemployment benefits?
It depends on your state. Some states treat severance as wages that delay or reduce unemployment benefits while it is being paid; others do not count it at all. Check your state unemployment agency's rules before assuming you can collect both at once. For your regular paycheck math, see our reverse tax calculator.