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 Texas?

Only federally. Texas has no state income tax, so a severance check sees the 22% federal supplemental withholding, Social Security (6.2% up to the wage base), and Medicare (1.45%) — and nothing for the state. Enter 0% as the state rate in the calculator.

Does Texas have a WARN Act?

No state version. Only the federal WARN Act applies in Texas: 100+ employee companies must give 60 days' notice before mass layoffs or plant closings. Smaller Texas employers have no advance-notice obligation.

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

Usually not at the same time. The TWC generally delays unemployment benefits during the weeks covered by severance paid under an agreement or company policy. Your benefits typically begin once the severance period ends. File your claim immediately anyway so the clock starts correctly.

Severance Pay Calculator for Texas (2026)

Severance Pay Calculator — Texas

Texas doesn't require severance pay, has no state income tax, and has no state layoff-notice law — so on paper it looks like there's nothing Texas-specific to know. There is, though, and it matters: the Texas Workforce Commission treats severance differently from most states, and it can push back the start of your unemployment benefits.

Run your numbers below. On the tax tab, leave the state rate at 0 — only federal withholding (22% supplemental rate, Social Security, Medicare) comes out of a Texas severance check, which means you keep noticeably more than someone with the same package in California or New York.

No state income tax on severance in Texas

Texas has no state income tax, so severance is taxed federally only: a flat 22% federal supplemental withholding (37% above $1 million), Social Security 6.2% up to the annual wage base, and Medicare 1.45%. That's a real advantage — the same $30,000 package nets you roughly $2,000–3,500 more in Texas than in a high-tax state.

Layoff notice in Texas: federal WARN only

Texas has no state mini-WARN law, so only the federal WARN Act applies: employers with 100+ full-time employees must give 60 days' written notice before a plant closing or mass layoff (generally 50+ employees at one site). If your employer met those thresholds and gave no notice, you may be owed up to 60 days of pay — worth checking before you sign anything away in a severance agreement.

Severance and unemployment benefits in Texas

This is where Texas is stricter than most. The Texas Workforce Commission treats severance paid under a written agreement or policy as covering weeks after your layoff — and you generally can't receive unemployment benefits for the weeks your severance covers. Wages in lieu of notice work the same way. Benefits typically start after the severance period runs out, so apply immediately anyway: the TWC will set your start date, and filing late only costs you covered weeks.

Severance Pay Calculator — Texas

No state income tax on severance in Texas

Layoff notice in Texas: federal WARN only

Severance and unemployment benefits in Texas

Severance questions in Texas

Severance calculators for other states