Estimate a severance package from your pay and years of service using the standard weeks-per-year convention — plus what withholding will take.
The standard severance formula
weekly pay = annual salary ÷ 52
severance = weekly pay × (base weeks + weeks-per-year × years of service)
There's no legal formula — this is convention, and it varies widely. One week per year is a typical floor at large companies; two weeks per year is common for managers or in negotiated packages; executives with contracts often see far more. Partial years usually count pro-rata.
A worked example
Six years at $80,000 with a two-weeks-per-year policy: weekly pay is $1,538, total weeks are 12, severance is $18,462 gross. After roughly 30% combined withholding, expect about $12,900 in hand — call it three to four months of tightened spending while you search.
What to check beyond the number
The weeks are only part of the package's value. Health insurance continuation (COBRA runs $600–2,000/month unsubsidized), payout of unused PTO, vesting of any equity, and whether benefits stop immediately or at period end can each be worth thousands. Before signing the release, price the whole package — and remember that laws in many states give you days, sometimes weeks, to consider it.
Frequently asked questions
How is severance pay usually calculated?
The most common US convention is one to two weeks of pay per year of service. Some employers add a flat base (e.g., 4 weeks minimum) and cap the total (26 or 52 weeks are common ceilings).
Is severance pay required by law?
No federal law requires severance for most workers. It comes from company policy, an employment contract, or a negotiated separation agreement. The federal WARN Act requires 60 days notice (or pay) only for large layoffs at bigger employers.
How is severance taxed?
As supplemental wages — typically 22% federal withholding plus Social Security, Medicare, and state tax, just like a bonus. A lump sum can be over-withheld compared to your real rate; the difference reconciles at filing.
Can I negotiate severance?
Often, yes — especially the number of weeks, continued health coverage (COBRA subsidy), the payout of unused PTO, and neutral references. Severance is offered in exchange for signing a release of claims, which is your leverage; it's reasonable to take time to review before signing.
Does severance affect unemployment benefits?
It can. Some states delay unemployment benefits until severance weeks are 'used up,' others don't count it at all. Check your state's unemployment office rules before assuming either way.