Estimates for personal planning — not tax, legal, or payroll advice. Every number above is gross pay unless a line says otherwise; the formula, its boundaries, and its test cases are published below.
How it works
weekly = $78,000 ÷ 52 = $1,500.00
severance = $1,500 × 2 wk × 6 yr = $18,000.00
coverage = $18,000 ÷ $6,500/mo = 2.8 months
The common formula
The most common package is one to two weeks of pay per year of service. It is a convention, not a rule — executives negotiate more, and struggling companies offer less. The coverage line converts the lump sum into “months of current pay,” the number you actually plan a job search around.
No federal law requires severance
Severance is a matter of agreement between employer and employee — the FLSA does not require it (DOL, Severance Pay). The WARN Act is often confused with severance: it requires 60 days' notice before mass layoffs at large employers, not a payout (DOL, WARN).
How severance is taxed
Severance is supplemental wages: employers commonly withhold federal income tax at the flat 22% rate (IRS Pub 15), and Social Security & Medicare apply. The preview line shows only the federal flat portion — your real take-home depends on your state and full-year income.
What you are usually signing
Severance is rarely a gift; it is normally consideration for a release of claims — you give up the right to sue over the employment or its ending. Two provisions deserve attention before signing: a non-disparagement clause, and whether the release covers claims you don't yet know about. If you are 40 or older, the Older Workers Benefit Protection Act gives you 21 days to consider the agreement (45 days if you're part of a group layoff) and 7 days to revoke after signing. The revocation period cannot be waived or shortened by anyone; the consideration period is a legal minimum you may choose to sign before — but an employer may not push you to by threatening to withdraw the offer or by dangling better terms for signing early (EEOC guidance).
Severance and unemployment benefits
Whether severance delays or reduces unemployment insurance is decided entirely at the state level. Some states treat a lump sum as wages allocated to the weeks following separation, pushing your benefit start date back; others disregard it. Check with your state unemployment agency before assuming the two stack — the answer changes the cash-flow math this calculator produces.
From the public test suite
assert severance($78,000, 2wk, 6yr).months == 2.8 ✓
assert severance($1,500/wk, 1wk, 10yr).gross == 15,000.00 ✓
// 36 cases · 96 assertions · runs on every deploy — see all
Sources
Built and maintained by Ethan Chen, independent developer. No credential is claimed that we don't have — what this page offers instead is a published formula and a public test suite.