Severance Pay Calculator
Severance pay is compensation an employer may offer when a job ends, often calculated as a number of weeks of pay for each year of service. This calculator works out the total using that common formula: it multiplies your years of service by the weeks granted per year to get the total weeks, then multiplies by your weekly pay. Enter your years of service, the weeks of pay awarded per year of service, and your weekly pay, and the tool returns the total weeks of severance and the dollar amount. Seeing both figures helps you understand an offer, compare it against a policy, or plan around a transition. A typical formula is one or two weeks per year of service, but the per-year input is editable because severance is set by employer policy, a contract, or a negotiated agreement rather than a federal rule. This tool computes the gross amount only; income and payroll taxes apply to severance as ordinary wages, and the WARN Act may require notice or pay in certain mass layoffs. Every figure here is computed deterministically from the formula shown in full below, with a worked example that reconciles exactly to the calculator so you can follow each step.
Severance is weeks of pay times the weekly rate: severance = years times weeks per year times weekly pay. For 10 years at 2 weeks per year and $1,500 weekly pay, total severance is $30,000.00 (20 weeks).
Severance Pay formula
Severance = (Years x Weeks per year) x Weekly pay
Years = completed years of service
Weeks per year = weeks of pay granted per year (often 1 or 2)
Weekly pay = your gross weekly wage
Total weeks of severance equals years of service times the weeks granted per year; multiplying by weekly pay gives the gross severance amount.
Worked example
Find the severance for 10 years of service at 2 weeks per year with 1,500 weekly pay.
- Total weeks: 10 x 2 = 20 weeks
- Multiply by weekly pay: 20 x 1,500 = 30,000
- Total severance pay = 30,000.00
These are the calculator's default inputs, so the result above matches the widget exactly.
Severance Pay Calculator: frequently asked questions
How is severance pay usually calculated?
A common approach grants a set number of weeks of pay, often one or two, for each year of service. Total weeks of service pay are multiplied by weekly pay to reach the lump sum, though terms vary by employer.
Is severance pay required by law?
There is no general federal requirement to pay severance. It is typically governed by employer policy, an employment contract, or a negotiated agreement. The WARN Act can require advance notice or pay in certain large layoffs.
Is severance pay taxed?
Yes. Severance is treated as ordinary wages and is subject to federal income tax withholding as well as Social Security and Medicare taxes, plus any applicable state tax.
Can I negotiate severance?
Often yes, especially for longer-tenured or senior roles. The weeks-per-year figure, continued benefits and other terms are frequently negotiable. Use the editable inputs to compare different offers.
What is the severance pay formula?
Severance equals years of service times weeks per year times weekly pay. For 10 years at 2 weeks per year and 1,500 weekly pay, that is 30,000.00.
Official sources
- US federal payroll, withholding and reimbursement guidance: US Internal Revenue Service (IRS). As at 25 June 2026.
Reviewed by the CalculatorHub team, edited by James Graham, 25 June 2026. See our methodology. This is general information, not financial, tax, legal or investment advice.