How is severance pay calculated?

Most U.S. severance packages use a simple formula: a number of weeks of pay for every year of service — typically one to two weeks per year, sometimes capped at a maximum (for example 26 weeks). Example: $85,000 salary is about $1,635/week; with 5 years of service at 2 weeks per year, that's 10 weeks, or roughly $16,350 gross. Senior roles and negotiated agreements can be higher. The SeveranceWorth calculator lets you plug in your own salary, tenure, and policy.

Is severance pay taxed like a bonus?

Yes. The IRS treats severance as 'supplemental wages', the same category as bonuses. When paid separately from regular wages, employers typically withhold a flat 22% for federal income tax (37% on any amount over $1 million), plus Social Security (6.2% up to the annual wage base) and Medicare (1.45%), plus any state income tax. Withholding is not your final tax bill — your actual tax is settled when you file your return.

Can I collect unemployment benefits and severance at the same time?

It depends on your state and on how the severance is paid. In many states a one-time lump sum does not block unemployment benefits, while 'salary continuation' severance (staying on payroll for X weeks) can delay eligibility until the payments end. Some states reduce benefits dollar-for-dollar during the severance period. File for unemployment right away regardless — your state agency will tell you when benefits start.

Is my employer required to pay severance?

In most cases, no. U.S. federal law (the FLSA) does not require severance pay. You are generally entitled to it only if your employment contract or offer letter promises it, the company has an established written severance policy, a union agreement covers it, or it is offered in exchange for signing a release of claims. Employers do owe your final paycheck and accrued PTO where state law requires it.

What is the WARN Act?

The federal WARN Act requires employers with 100 or more full-time employees to give 60 days' written notice before a mass layoff or plant closing. If proper notice isn't given, affected workers may be entitled to up to 60 days of back pay and benefits. Several states (like California and New York) have stricter 'mini-WARN' laws covering smaller employers. WARN pay is separate from — and can be in addition to — severance.

How much does COBRA cost per month?

Under COBRA you pay the entire premium — the share you paid as an employee plus everything your employer was covering — plus an administrative fee of up to 2%. Because employers typically cover 70–80% of the premium, COBRA often costs 4–5x what came out of your paycheck: commonly $600–$800+/month for individual coverage and $1,800–$2,400+/month for family coverage. Always compare against ACA marketplace plans at healthcare.gov before electing.

Can I negotiate my severance package?

Often, yes — especially when you're asked to sign a release of legal claims, which is what the company is paying for. You can ask for more weeks of pay, payment of your COBRA premiums for several months, an extended exercise window on stock options, vesting of near-term equity, a neutral reference, and outplacement support. You typically have at least 21 days to consider a release if you're over 40 (ADEA), so don't sign on the spot.

Does SeveranceWorth store my salary information?

No. Every calculator runs entirely in your browser. The numbers you type — salary, savings, expenses, premiums — are never transmitted, stored, or seen by anyone. There is no backend, no database, and no account. Refresh the page and everything is gone.

Is severance taxed in California?

Yes. Severance is taxable income in California. For withholding, employers take a flat 6.6% state supplemental rate on a separate severance check (10.23% for bonuses/stock options), plus the 22% federal supplemental rate, Social Security, and Medicare. Your final California tax depends on your full-year income and is settled when you file.

Does California have a WARN Act?

Yes — CAL-WARN. It applies to employers with 75+ employees and requires 60 days' written notice before mass layoffs of 50+ workers, relocations, or closures. It's stricter than federal WARN (which needs 100+ employees). Missing notice can mean up to 60 days of back pay, separate from any severance.

Can I get unemployment and severance at the same time in California?

Yes. California's EDD does not count severance pay as wages, so it doesn't reduce or delay unemployment benefits. Watch out for the exception: pay in lieu of a notice period does count as wages for those weeks. File your claim right away regardless.

Is my California employer required to pay severance?

No. No California law mandates severance in the general case. You're entitled to it only if a contract, policy, or separation agreement provides it. California does require your final paycheck — including accrued vacation — immediately on termination, which is separate from severance.

Severance Pay Calculator for California (2026)

Severance Pay Calculator — California

California does not require employers to pay severance — like every other state, severance here comes from your employer's policy, your offer letter, or a separation agreement you're asked to sign. What California does have is one of the country's strongest layoff-notice laws (CAL-WARN), a state supplemental tax that comes out of a severance check, and an unemployment system that — unusually — does not count severance against your benefits.

Use the calculator below with your own salary and tenure to estimate a typical package, then check the tax tab with California's supplemental rate to see a realistic take-home figure.

How California taxes severance

California taxes severance as regular income, and for withholding it's treated as supplemental wages: employers withhold a flat 6.6% for the state (10.23% applies to bonuses and stock options) on top of the 22% federal supplemental rate, Social Security, and Medicare. Withholding isn't your final bill — California's brackets run from 1% to 13.3%, so what you actually owe is settled on your state return based on your full-year income.

California's layoff-notice (WARN) law

CAL-WARN is broader than the federal law. It covers employers with 75 or more employees (federal WARN requires 100+) and requires 60 days' written notice before a mass layoff of 50 or more workers within 30 days, a relocation, or a closure — with no requirement that the layoff hit a percentage of the workforce. If notice wasn't given, affected employees can be owed up to 60 days of pay and benefits. That WARN liability is separate from, and on top of, any severance offer.

Severance and unemployment benefits in California

California is one of the friendlier states here: the EDD does not treat severance pay as wages, so a severance package neither delays nor reduces your unemployment benefits. One important distinction — "wages in lieu of notice" (being paid for a notice period instead of working it) do count as wages and can affect eligibility for those weeks. File your EDD claim the week you're laid off either way.

Severance Pay Calculator — California

How California taxes severance

California's layoff-notice (WARN) law

Severance and unemployment benefits in California

Severance questions in California

Severance calculators for other states