Getting laid off is stressful enough without guessing what your final paycheck will actually be. Most people fixate on the lump-sum severance number printed on their separation agreement, but that figure is only part of the story. The real question is how much money you will actually have available to cover rent, groceries, and health insurance while you look for your next role.
This severance pay calculator gives you the full transition picture in three layers: your gross lump-sum severance based on years of service, the cost of keeping your health insurance through COBRA, and the unemployment benefits you can expect on top. By subtracting COBRA premiums and adding UI benefits, it shows your net transition support instead of a single optimistic number.
How to Use
- Enter your Annual Gross Salary — your pre-tax base pay. The tool converts it to weekly pay automatically by dividing by 52, which is how almost every US severance formula measures you.
- Set Years of Service — your total tenure at the company, including partial years. Longer tenure is the single biggest driver of severance because most formulas pay per year worked.
- Adjust Severance Weeks per Year. The common rule of thumb is one to two weeks of pay for every year of service. Enter 0.5 for a modest package, 1.5 for a typical professional arrangement, or 2.0 for a generous long-tenure or executive deal.
- Add your COBRA Monthly Premium. After you leave, your employer stops covering health insurance, and COBRA lets you keep the same plan by paying the full premium yourself. A family plan often runs $600–$900 per month.
- Set Months of COBRA Continuation. COBRA legally lasts up to 18 months, but most people land a new job within 3–6 and switch plans, so 6 months is a realistic default.
- Enter your Weekly Unemployment Benefit. Your state pays this — usually 30–45% of your prior weekly wage, up to a state cap. If you do not know it, estimate roughly a third of your weekly pay.
- Set Weeks of Unemployment Benefits. Most states fund up to 26 weeks; extended benefits kick in only during periods of high unemployment.
The result card breaks out your derived weekly pay, total weeks of severance, the gross lump sum, your COBRA cost, your total unemployment benefits, and finally the total transition support — the cash you really have to bridge to your next job.
The Severance Formula
US severance is not legally required by the Fair Labor Standards Act (FLSA). It is set by company policy or an individual employment contract, and the most common structure is:
Gross severance = weekly pay × (years of service × weeks per year)
Where weekly pay is your annual salary divided by 52. For example, someone earning $78,000 a year has a weekly pay of $1,500. With 5 years of service at 1.5 weeks per year, they are owed 7.5 weeks of pay, or $11,250 gross.
From that lump sum, you must subtract the cost of staying insured. COBRA continues your group health plan but shifts the entire premium onto you — the share your employer used to pay on your behalf disappears. On a $650 monthly plan over 6 months, that is $3,900 coming out of your severance.
On the upside, most layoff victims also qualify for state unemployment insurance. At $450 per week for 26 weeks, that adds $11,700 in benefits that do not reduce your severance (though severance itself may delay when UI starts in some states). The bottom line: $11,250 severance minus $3,900 COBRA plus $11,700 unemployment equals $19,050 of total transition support.
What Affects Your Severance Number
Not every layoff is the same, and the size of your package depends on several factors:
- Tenure — the strongest lever. A company that pays 1.5 weeks per year gives a 2-year employee only 3 weeks of pay, while a 10-year manager walks away with 15 weeks.
- Level and seniority — executives often negotiate 3–6 months or more, while entry-level staff may get two weeks or nothing.
- Company policy — many large firms publish a severance matrix (e.g., 1 week per year, capped at X). Check your employee handbook or HR portal.
- Release of claims — severance is almost always paid in exchange for signing a waiver of claims and a non-disparagement agreement. Read it carefully.
- State and WARN Act rules — in mass layoffs, employers may owe additional notice pay, but that is separate from negotiated severance.
Examples
Example 1 — A typical professional layoff. An employee earns $78,000, has 5 years at the company, and is offered 1.5 weeks per year. Weekly pay is $1,500, so the gross severance is $11,250. They elect 6 months of COBRA at $650/month ($3,900) and expect $450/week of unemployment for 26 weeks ($11,700). After health coverage, their net severance is $7,350, and total transition support reaches $19,050.
Example 2 — Long tenure at the generous end. A manager earning $104,000 has 8 years and a 2.0 weeks-per-year policy. Weekly pay is $2,000, and they are owed 16 weeks — a $32,000 lump sum. Nine months of COBRA at $700/month costs $6,300, and unemployment at $500/week for 26 weeks adds $13,000. Net severance is $25,700, for a total transition package of $38,700.
Example 3 — A $1M executive. A C-suite employee earning $1,000,000 has 10 years and a 2.0 weeks-per-year arrangement. Weekly pay is about $19,231, and 20 weeks of severance is $384,615 gross. Even after $14,400 of COBRA and before $20,800 of unemployment benefits, the package approaches $391,000 — a reminder that executive severance is negotiated, not formulaic.
FAQ
How is severance pay actually calculated?
The standard formula is weekly pay multiplied by the number of weeks of severance you are owed, where weeks = years of service times your company's weeks-per-year rate. Weekly pay is your annual salary divided by 52. There is no federal law requiring severance, so the exact multiplier comes from company policy, your employment contract, or a negotiated separation agreement.
Is severance paid as a lump sum?
Often yes, though some companies pay it as salary continuation over several months. A lump sum gives you the whole amount at once but can push you into a higher tax withholding bracket in that pay period, while continuation spreads the income and the tax burden out over time. Ask HR which method applies to your agreement.
Do I have to pay taxes on severance?
Yes. Severance pay is considered wages by the IRS and is subject to federal income tax, Social Security, and Medicare withholding. It is taxed the same as your regular salary, though a lump sum may be withheld at a flat supplemental rate. Your final number on this page is a gross estimate, not your take-home amount.
Can I collect unemployment while I receive severance?
It depends on your state and how the severance is paid. If your severance is a lump sum, many states still let you claim unemployment after a waiting week. If the company pays salary continuation as if you are still employed, UI benefits are usually delayed until those payments end. Some states also offset weekly UI by weekly severance. Check your state's department of labor for the exact offset rule.
How does COBRA work after a layoff?
COBRA is a federal law that lets you keep your employer-sponsored health plan for up to 18 months after you leave. The catch: you now pay the entire premium — both your old share and the share your employer used to cover — plus a small 2% admin fee. That is why this calculator subtracts your estimated COBRA cost from your severance before showing net support. You can also compare marketplace plans at Healthcare.gov, which may be cheaper.
What is a typical severance package?
For rank-and-file employees in the US, the norm is about one to two weeks of pay for each year of service. A worker with 5 years often receives 5–10 weeks of pay. Professionals and managers commonly get 1–3 months, while executives negotiate several months or more. There is no legal minimum, so treat any number below two weeks per year of tenure as negotiable.
Should I negotiate my severance?
Yes, especially if you were not given a written policy. You can often negotiate extra weeks, an extended COBRA subsidy, outplacement services, or a neutral reference. Do not sign the release on the spot — take the agreement home, and consider having an employment attorney review it if the package is large or the circumstances are disputed.
Disclaimer
This severance pay calculator is provided for informational purposes only and does not constitute legal, tax, employment, or benefits advice. All figures are estimates based on the inputs you enter and a common weeks-per-year-of-service formula; actual severance is governed by your employer's plan, your separation agreement, and applicable state and federal law. COBRA premiums, unemployment benefit amounts, duration, and offset rules vary by state and change over time. Always confirm your exact severance terms, tax withholding, COBRA election, and unemployment eligibility directly with your employer, a benefits administrator, and your state labor agency before making financial decisions.