2026 severance pay calculator

How severance gets its number

The Department of Labor says severance is usually based on how long you worked for the employer, and that the Fair Labor Standards Act does not require it at all. The amount comes from your agreement, your company's policy, or a negotiation. That is why this calculator asks for weeks of pay per year worked instead of assuming a figure: one company may pay one week per year, another may pay two, and a third may pay one flat sum to everyone. If your letter already names a total, put it under More options and the formula steps aside.

What comes out of the check

The IRS lists severance as a supplemental wage, and severance payments are subject to Social Security, Medicare, and federal income tax withholding. Paid on its own, the check can be withheld at a flat 22 percent federal rate, plus 6.2 percent for Social Security and 1.45 percent for Medicare. On the starting example above, $6,000 of severance loses $1,320, $372, and $87 to those three lines and leaves $4,221. Social Security stops once your wages for the year pass $184,500, so a late-year layoff for a high earner can lose less. Once supplemental wages for the year pass $1,000,000, the part above that line is withheld at 37 percent, which this calculator applies to a single payment only.

Why your tax return may change the answer

Withholding is a deposit toward your tax for the year, and the flat rate has nothing to do with your real bracket. A worker in the 12 percent bracket may get some of it back at filing, while someone pushed into a higher bracket may owe more. If your employer pays severance mixed in with regular wages and does not list the two amounts separately, your employer withholds on the combined amount as one regular paycheck, which can take a larger share of that check.

State income tax is the one line we cannot fill in for you, because state rules on supplemental pay differ. Enter a rate under More options to include it. Our state pages also show when a final paycheck is due. While you are working through a layoff, the PTO payout and COBRA cost calculators cover the next two money questions.