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 required in New Jersey?

For covered mass layoffs, yes — New Jersey is the only state that mandates it. Under NJ WARN, employers with 100+ employees who lay off 50+ workers owe one week of severance per full year of service, plus four extra weeks if they failed to give the required 90 days' notice. Smaller layoffs follow the normal rule: severance only if a policy or agreement provides it.

Is severance taxed in New Jersey?

Yes, as ordinary income. NJ has no flat supplemental rate — withholding follows the regular state tables (brackets 1.4% to 10.75%), plus federal 22% supplemental withholding, Social Security, and Medicare. Enter your NJ marginal rate in the calculator's state field.

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

Yes. NJ does not reduce or delay unemployment benefits because of severance pay, including the statutory NJ WARN severance. Pay in lieu of notice is the exception — it counts as wages for those weeks. File right away.

How much notice does NJ WARN require?

90 days' written notice for covered mass layoffs (50+ employees at companies with 100+ workers) — the longest in the country alongside New York's 90 days. An employer that gives less owes each affected worker four additional weeks of severance beyond the one-week-per-year statutory amount.

Severance Pay Calculator for New Jersey (2026)

Severance Pay Calculator — New Jersey

New Jersey is the exception to the rule you'll read everywhere else on this site. Since its WARN law was amended in 2023, New Jersey is the only U.S. state where severance is legally required for covered mass layoffs: employers with 100 or more employees must pay one week of severance per full year of service to workers cut in a qualifying layoff — and give 90 days' notice, or owe four extra weeks of severance on top.

If your layoff was part of a smaller cut, the usual rules apply: severance is whatever your policy or agreement provides. Either way, the calculator below handles the math — for the NJ WARN statutory minimum, set 'weeks per year of service' to 1.

How New Jersey taxes severance

New Jersey taxes severance as ordinary income. Unlike many states, it publishes no flat supplemental-withholding rate — employers withhold using the standard NJ tables, so the state cut depends on your bracket (rates run from 1.4% up to 10.75% above $1 million). For the calculator, entering your NJ marginal rate gives a realistic estimate. Federal treatment is the usual: 22% supplemental withholding, Social Security, Medicare.

New Jersey's layoff-notice (WARN) law

NJ WARN (the Millville Dallas Airmotive Plant Job Loss Notification Act, as amended effective April 2023) is the strongest layoff law in the country. For employers with 100+ employees, a mass layoff of 50 or more workers triggers two obligations: 90 days' written notice, and mandatory severance of one week of pay per full year of service. If the employer fails to give the full 90 days, it owes four additional weeks of severance. This is a statutory floor — an agreement can pay more, but for covered layoffs it can't pay less, and you generally can't be asked to waive it without state or court approval.

Severance and unemployment benefits in New Jersey

New Jersey treats severance kindly for unemployment purposes: a severance payment made in connection with your separation — including the NJ WARN statutory severance — does not reduce or delay your unemployment benefits. The exception is pay in lieu of notice, which counts as wages for the weeks it covers. File your claim with the NJ Department of Labor as soon as the layoff happens.

Severance Pay Calculator — New Jersey

How New Jersey taxes severance

New Jersey's layoff-notice (WARN) law

Severance and unemployment benefits in New Jersey

Severance questions in New Jersey

Severance calculators for other states