Severance Package Value Calculator

How the calculation works

Everything starts from an offer you are already holding. There is no attempt to compute what you are “owed,” because in the United States that number generally does not exist. Employment is at-will in almost every state and no federal law requires severance pay. It comes from a contract, a written policy, or a discretionary decision made at the layoff. Anything claiming to calculate an entitlement is either describing a contract it cannot see or importing law from another country.

Cash. Weeks offered times your gross weekly base pay, plus accrued PTO hours times your hourly rate, plus any prorated bonus, retention bonus, or other lump sum in the agreement. From an annual salary, weekly pay is salary divided by 52 and the hourly rate is that figure divided by your scheduled hours. Both divisions appear in the breakdown, because an offer quoted in months will not line up: one month is 4.33 weeks, not 4, and using 4 quietly loses about 8% of the severance line.

Withholding. Severance, PTO payouts and bonuses are supplemental wages, and they are also wages for Social Security and Medicare. The tool applies the flat 22% federal supplemental rate (37% above $1,000,000 in a calendar year), 6.2% Social Security until your year-to-date wages reach the annual wage base, 1.45% Medicare on everything, and the extra 0.9% Additional Medicare Tax on wages above $200,000 from one employer. State and local tax is included only if you type in a rate: several states set their own flat supplemental rate and a few have no income tax, so there is no honest way to guess.

Benefits. Covered months of health coverage times the full monthly premium, plus the stated value of outplacement. These stay on their own line and never enter the runway figure. They are worth something; they do not pay rent.

Runway. Net cash after withholding, divided by your monthly essential expenses. This is the headline output because it is what people actually need to know on the day they get the letter. Benchmark. Weeks offered divided by years of service, so you can see where the offer sits against the one-to-two-weeks-per-year convention.

A worked example, with real numbers

Dana earns $104,000 a year on a 40-hour schedule, so weekly base pay is $2,000 and the hourly rate is $50. After six years she is laid off in late August and offered 10 weeks of severance, payout of 60 accrued PTO hours, a $4,500 prorated bonus, three months of employer-paid COBRA at a full premium of $1,850, and outplacement the company values at $1,200. Her year-to-date wages are $70,000, her state withholds a flat 5% on supplemental wages, and her essential monthly expenses are $4,200.

• Severance pay: 10 × $2,000 = $20,000
• PTO payout: 60 × $50 = $3,000
• Prorated bonus: $4,500. Gross cash: $27,500
• Federal supplemental withholding: 22% × $27,500 = $6,050
• Social Security: her $70,000 leaves plenty of room under the 2026 wage base, so all $27,500 is subject to 6.2% = $1,705
• Medicare: 1.45% × $27,500 = $398.75. Additional Medicare: none, she is nowhere near $200,000
• State: 5% × $27,500 = $1,375. Total withholding: $9,528.75
• Net cash: $17,971.25. Benefits: (3 × $1,850) + $1,200 = $6,750

Total package value is $34,250. Runway is $17,971.25 divided by $4,200, or 4.3 months. Ten weeks over six years is 1.67 weeks per year, inside the usual convention. The gap between the $34,250 headline and the $17,971 she can actually spend is why this tool keeps the two apart. The breakdown flags one more thing: from month four that $1,850 premium becomes Dana’s own expense, so 4.3 months is optimistic if the search runs long.

What people and competing calculators get wrong

• Framing it as an entitlement. The most common error and the most damaging: it sets an expectation with no legal basis behind it.
• Confusing the WARN Act with severance. The federal WARN Act requires 60 days’ notice of qualifying plant closings and mass layoffs. That is notice, not severance pay. An employer that gives proper notice owes nothing extra under WARN.
• Ignoring FICA. Applying 22% and stopping overstates net cash by 7.65% of gross for most people. Severance is wages.
• Treating 22% as the tax owed. It is withholding, and people are surprised at filing time in both directions.
• Blending benefits into a cash headline. A $34,250 “value” that is really $17,971 of spendable money leads to bad decisions about how long you can hold out for the right role.
• Mixing 52-week and 12-month bases in one calculation, or converting months to weeks by multiplying by 4.
• Porting foreign law. Ontario ESA termination and severance pay, common-law reasonable notice and UK statutory redundancy pay are real formulas. None of them apply in the US.
• Rounding at every step. Rounding each line before summing drifts by a few dollars. This tool rounds once, at display.

Edge cases worth knowing about

Lump sum versus salary continuation. The same total can behave very differently. Salary continuation may keep you on the group health plan, may push income into the next tax year, and is more likely to delay unemployment benefits in states that treat it as ongoing wages. Under a year of service. The weeks-per-year benchmark stops being meaningful; the tool shows the ratio but the convention was never built for short tenures. Variable pay. Most agreements define severance on base pay only, so a large commission or bonus component will not appear in the severance line even though it was most of your income. Accrued PTO. Whether it must be paid out at all depends on your state and on your employer’s written policy, so check the offer against your handbook. High earners. Once year-to-date wages pass the Social Security wage base, FICA on the severance drops to 1.45%, and above $200,000 an extra 0.9% starts. Both are handled.

What this tool does not model

Your final tax bill. State and local rules beyond the flat rate you enter. Unemployment benefits, and whether severance delays them. Equity of any kind — unvested RSUs, option acceleration, post-termination exercise windows — which is frequently the largest number in the whole decision. 401(k) match true-ups, ESPP, or pension effects. The value of a non-compete or non-solicit you are being asked to accept. The value of the legal claims you are being asked to release, which is a legal question and not an arithmetic one. Inflation, investment returns, and the possibility that the offer is negotiable.

Rates used: 22% and 37% supplemental withholding per IRS Publication 15 (Circular E), 2026; Social Security wage base of $184,500 for 2026 per SSA, Contribution and Benefit Base; 0.9% Additional Medicare Tax above $200,000 per IRS Topic no. 560. On the absence of a federal severance requirement, see US Department of Labor: Severance Pay; on 60 days’ notice, the WARN Act; on waivers and the 21/45 and 7-day periods, the EEOC guidance on severance waivers; on coverage after a layoff, DOL COBRA and HealthCare.gov.