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 Washington State?

Only federally. Washington has no state income tax, so a severance check is reduced by the 22% federal supplemental withholding, Social Security, and Medicare — nothing for the state. Use 0% in the calculator's state field.

Does Washington have a WARN Act?

Yes — since July 2025. Washington's mini-WARN covers employers with 50+ full-time employees in the state and requires 60 days' written notice before closings or mass layoffs of 50+ workers. It reaches smaller companies than the federal law's 100-employee threshold.

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

Yes. The ESD doesn't deduct severance from unemployment benefits, so you can collect both simultaneously — a meaningful runway extension. Pay in lieu of notice is treated differently and can affect specific weeks. File right away.

Severance Pay Calculator for Washington (2026)

Severance Pay Calculator — Washington

Washington is an unusually good state to receive severance in: there's no state income tax to withhold from it, the Employment Security Department doesn't count it against unemployment benefits, and — as of July 2025 — Washington has its own mini-WARN law that reaches smaller employers than the federal act.

Run your package below. Leave the state rate at 0 on the tax tab — only federal withholding applies — and note that both severance and unemployment can flow at the same time here, which materially extends your runway.

No state income tax on severance in Washington

Washington has no state income tax, so severance faces only federal withholding: the 22% flat supplemental rate, Social Security up to the wage base, and Medicare. (Washington's capital-gains tax doesn't apply to wages, and payroll programs like Paid Family & Medical Leave premiums generally stop with employment.) On a typical package, total withholding is around 30% — all federal.

Washington's layoff-notice (WARN) law

Washington enacted a mini-WARN law effective July 2025 — one of the newest in the country. It requires employers with 50 or more full-time employees in the state to give 60 days' written notice (to workers, unions, and the Employment Security Department) before a business closing or a mass layoff of 50 or more employees. That's a lower employer threshold than the federal WARN Act's 100+, so layoffs at mid-sized Washington companies that federal law never touched now carry notice obligations — and potential back-pay liability if notice wasn't given.

Severance and unemployment benefits in Washington

Washington's Employment Security Department does not treat severance pay as deductible income: receiving a severance package neither delays nor reduces your unemployment benefits, so both can run in parallel. Pay in lieu of notice, by contrast, does count for the weeks it covers. File your ESD claim the same week you're laid off.

Severance Pay Calculator — Washington

No state income tax on severance in Washington

Washington's layoff-notice (WARN) law

Severance and unemployment benefits in Washington

Severance questions in Washington

Severance calculators for other states