Am I entitled to severance?

No federal law requires severance pay in the United States. It exists because an employer policy, an employment contract, a collective agreement or a negotiated exit provides it. The WARN Act requires advance notice of large layoffs, but notice is not the same as severance.

How much severance is typical?

One to two weeks per year of service is the most common formula, often with a cap of 12 to 26 weeks. Senior and executive roles frequently negotiate more, sometimes as a flat number of months regardless of tenure. Treat any published average as a starting point, not an entitlement.

Why is so much withheld from my severance?

Severance is supplemental wages, so employers usually apply a flat federal supplemental withholding rate rather than the rate implied by your W-4. If your normal effective rate is lower, you have over-withheld and will get it back when you file. It is a withholding timing issue, not extra tax.

Do I get paid for unused vacation?

It depends on your state and your policy. Several states treat accrued vacation as earned wages that must be paid at separation and prohibit forfeiture; others allow a written policy to say otherwise. Check your state labor department, because the amounts involved can be substantial.

Should I sign the agreement straight away?

Severance is almost always conditioned on signing a release of claims, and that is a legal document worth having reviewed. Workers over 40 are generally given a statutory period to consider an agreement and a window to revoke after signing. There is rarely a good reason to sign on the spot.

Severance Pay Calculator

Estimate a severance package from weeks per year of service, plus PTO payout and the flat supplemental withholding that shrinks the deposit.

By StatesideCalc EditorialLast verified July 26, 2026

Annual salary

Years of service

yrs

Weeks per year of service

Two weeks per year is a common policy figure.

wks

Unused PTO paid out

hrs

Severance is supplemental wages, so employers usually withhold at a flat rate rather than your W-4 rate. That is withholding, not your final tax — the difference settles when you file.

What this calculator does

A severance offer arrives as a gross number and a stack of paperwork, usually on a day when nobody is doing their best arithmetic. This calculator converts the formula into weeks and dollars, adds any PTO payout, and estimates the net after withholding — plus the figure that actually matters when deciding what to do next, which is how many months of runway the package represents.

The formula

Most US severance policies use weeks of pay per year of service:

weekly pay      = annual salary ÷ 52
weeks earned    = years of service × weeks per year
severance gross = min(weeks earned, cap) × weekly pay

Someone earning $90,000 with six years of service, at two weeks per year, earns 12 weeks — about $20,769 gross. Add 80 hours of unused PTO at roughly $43.27 an hour and the package is $24,231 gross.

One to two weeks per year is the common range, and caps of 12 to 26 weeks are usual. The cap matters most to long-tenured employees, which the calculator flags directly, since a 20-year employee under a 12-week cap is losing a substantial number of earned weeks.

Why the deposit is smaller than expected

Severance is supplemental wages, and employers typically withhold at a flat federal supplemental rate rather than at the rate implied by your W-4. Add state withholding, Social Security and Medicare, and the deposit can be materially below the gross.

The important point: this is withholding, not your final tax bill. If your actual effective rate for the year is lower — quite likely if you are out of work for part of it — the excess comes back when you file. The take-home pay calculator estimates ordinary deductions by state, and the bonus tax calculator covers the same supplemental-withholding mechanism.

The PTO question is state law

Whether unused vacation must be paid out is one of the few parts of this that law governs rather than policy. Several states treat accrued vacation as earned wages that must be paid at separation and prohibit forfeiture clauses. Others let a written policy determine it.

Because it turns on your state and your policy language together, check your state labor department rather than relying on what a colleague experienced elsewhere. On a large accrued balance the difference runs into thousands. The PTO accrual calculator works out what your balance will actually be on a given date, which is worth knowing before a separation date is set.

Runway is the number that matters

The gross figure is less useful than the answer to “how long does this last?” The calculator reports months of pay, but the honest version uses your expenses rather than your salary — the emergency fund calculator sizes a monthly cost figure, and severance plus savings divided by that is your real runway.

Two things extend it. Unemployment benefits may be available, though several states reduce or delay them while severance is being paid, and the rules vary enough that it is worth checking your state’s specifics before assuming. And health coverage continuation is a real monthly cost that often surprises people — employer coverage typically ends quickly, and continuation coverage is priced at the full unsubsidised premium.

What this leaves out

Negotiation. The first offer is frequently not the last, particularly on notice period, the reference, equity treatment and the timing of payment.
Equity and bonuses. Unvested equity, accelerated vesting and a pro-rated bonus are separate negotiations and can dwarf the cash severance.
The release. Severance is nearly always conditioned on releasing claims. That is a legal document; have it reviewed rather than skimmed.
Statutory consideration periods. Workers over 40 are generally entitled to a period to consider an agreement and a revocation window afterwards.
Non-compete and non-solicit terms, which may be in the agreement and affect what you can do next.
State income tax, which the flat withholding estimate here does not model precisely.

None of this is legal advice, and a severance agreement is exactly the situation where an hour of an employment lawyer’s time is cheap relative to what is at stake. For the federal position, the Department of Labor states plainly that severance pay is a matter of agreement between employer and employee.

How this is calculated

weekly pay = annual salary ÷ 52 weeks earned = years of service × weeks per year weeks paid = min(weeks earned, policy cap) severance gross = weeks paid × weekly pay PTO payout = unused hours × hourly rate net = gross − (gross × supplemental withholding rate)

Frequently asked questions

Am I entitled to severance?: No federal law requires severance pay in the United States. It exists because an employer policy, an employment contract, a collective agreement or a negotiated exit provides it. The WARN Act requires advance notice of large layoffs, but notice is not the same as severance.
How much severance is typical?: One to two weeks per year of service is the most common formula, often with a cap of 12 to 26 weeks. Senior and executive roles frequently negotiate more, sometimes as a flat number of months regardless of tenure. Treat any published average as a starting point, not an entitlement.
Why is so much withheld from my severance?: Severance is supplemental wages, so employers usually apply a flat federal supplemental withholding rate rather than the rate implied by your W-4. If your normal effective rate is lower, you have over-withheld and will get it back when you file. It is a withholding timing issue, not extra tax.
Do I get paid for unused vacation?: It depends on your state and your policy. Several states treat accrued vacation as earned wages that must be paid at separation and prohibit forfeiture; others allow a written policy to say otherwise. Check your state labor department, because the amounts involved can be substantial.
Should I sign the agreement straight away?: Severance is almost always conditioned on signing a release of claims, and that is a legal document worth having reviewed. Workers over 40 are generally given a statutory period to consider an agreement and a window to revoke after signing. There is rarely a good reason to sign on the spot.