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 Massachusetts?

Yes — at the 5% flat state rate, plus the federal 22% supplemental withholding, Social Security, and Medicare (and a 4% state surtax only on annual income above about $1 million). Expect roughly 35% withheld from a typical package.

Does Massachusetts have a WARN Act?

Not a binding one. The federal WARN Act applies (100+ employees, 60 days' notice). Massachusetts's own plant-closing law encourages notice at larger facilities but doesn't create the back-pay rights that true mini-WARN states like California, New York, or New Jersey provide.

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

It hinges on the release. Severance paid in exchange for a signed release of claims does not affect MA unemployment benefits — you can collect both. Severance paid without a release generally disqualifies you for the weeks it covers. Most packages require a release, so most people can collect both.

Severance Pay Calculator for Massachusetts (2026)

Severance Pay Calculator — Massachusetts

Massachusetts doesn't mandate severance, taxes it at the state's 5% flat rate, and has no binding mini-WARN statute — but it has one rule that surprises almost everyone: whether your severance blocks unemployment benefits depends on whether you signed a release of claims to get it. Severance paid in exchange for a signed release doesn't disqualify you; severance paid without one can.

Estimate your package below with 5% as the state rate. Then, before you decide how to feel about the release your employer wants signed, read the unemployment section — in Massachusetts the release actually cuts in your favor for benefits purposes.

How Massachusetts taxes severance

Massachusetts taxes severance at its 5% flat income-tax rate, withheld alongside the federal 22% supplemental rate, Social Security, and Medicare. Very large packages should note the 'millionaires tax': total annual income above roughly $1 million (inflation-adjusted) carries an extra 4% surtax. For most packages, plan on about 35% total withholding.

Layoff notice in Massachusetts: federal WARN only

Massachusetts has no binding mini-WARN law — the federal WARN Act (100+ employees, 60 days' notice for mass layoffs or closings) is what applies. The state does have a plant-closing law encouraging notice and providing reemployment assistance for closures at larger facilities, but it lacks the teeth of a true mini-WARN: no private right to back pay like California's or New Jersey's laws. If your employer was federal-WARN-sized and gave no notice, that claim exists independently of severance.

Severance and unemployment benefits in Massachusetts

Massachusetts has the country's most distinctive severance/unemployment rule. Severance allocated to weeks after your separation normally disqualifies you from benefits for those weeks — unless the severance was paid in exchange for a signed release of claims, in which case it doesn't affect your benefits at all. Since most negotiated packages do require a release, most Massachusetts severance recipients can collect unemployment immediately. Report the details accurately to the DUA and let them classify it.

Severance Pay Calculator — Massachusetts

How Massachusetts taxes severance

Layoff notice in Massachusetts: federal WARN only

Severance and unemployment benefits in Massachusetts

Severance questions in Massachusetts

Severance calculators for other states