Severance Package Calculator
Estimate a reasonable severance package and see the net amount after taxes, plus negotiation leverage points.
Standard Severance Formulas in 2026
There's no federal law requiring severance pay in the US — it's almost entirely employer policy and individual negotiation. Industry norms for unionized or large-company layoffs:
| Role Level | Typical Severance |
|---|---|
| Individual Contributor | 1-2 weeks per year of service |
| Manager / Senior IC | 1.5-3 weeks per year |
| Director | 2-4 weeks per year |
| VP | 3-6 months minimum |
| C-suite / SVP | 6-24 months + accelerated vesting |
Tech and finance pay above these norms. Manufacturing and retail often pay below. Source: SHRM 2025 Severance Practices Survey, Mercer Total Rewards Database. Last updated: May 2026.
Beyond the Base Severance: What to Negotiate
(1) Pro-rated annual bonus. Most layoff timing is mid-year — push for the % of bonus target earned through your termination date. (2) Accelerated stock vesting. RSUs and stock options vesting in the next 3-6 months can often be vested at termination. (3) Extended COBRA subsidy. Standard COBRA is at YOUR expense; ask employer to cover 3-6 months. (4) Outplacement services. $5K-$25K value, often easy to add. (5) Reference letter. Written, neutral-or-positive. Critical for next job search. (6) Non-compete relief or limited NDA terms. If you have a non-compete, push for it to be waived or modified.
Tax Treatment of Severance
Severance is treated as supplemental wages. Federal withholding is flat 22% (or 37% above $1M). Combined with state tax and FICA, expect 30-40% withholding. The IRS treats severance as ordinary income, taxed at your marginal rate. Tip: ask if severance can be paid as a salary continuation (paychecks continuing) rather than a lump sum — this can help with state unemployment eligibility in some states.
Don't Sign Without Lawyer Review
The severance agreement includes a release of claims — you agree NOT to sue for wrongful termination, discrimination, wage and hour violations, retaliation, etc. Once signed, you give up significant legal rights. ALWAYS have an employment attorney review the release before signing. Attorneys charge $300-$800 flat fee for review — easily recovered through better terms negotiated based on their findings. Source: National Employment Lawyers Association (NELA) standards.
Severance Package Calculator: 2026 Federal Rules You Must Know Before Signing
This severance package calculator estimates a fair offer, but three federal rules control what your employer can and cannot ask you to sign in 2026. First, the WARN Act (U.S. Department of Labor WARN Act guidance) requires 60 days' written notice for mass layoffs of 50+ employees at a single site — if skipped, you're entitled to 60 days of back pay on top of any severance offered. Second, the Older Workers Benefit Protection Act (OWBPA) gives anyone 40+ at least 21 days to consider a single-employee release and 45 days for group layoffs, plus 7 days to revoke after signing. Third, effective February 2023, the NLRB McLaren Macomb decision limits overly broad confidentiality and non-disparagement clauses in severance agreements. Never sign the day the offer arrives — the countdown clock is yours to use.
Last updated 2026-07-15.