Severance Package Calculator

You're being offered a severance package. How much is it actually worth after taxes and COBRA? This severance package calculator gives you the number that matters — gross severance, federal withholding (usually 22% flat supplemental for lump sums), FICA, and the often-overlooked cost of continuing health insurance through COBRA.

A "4 months of severance" on a $110k salary sounds like $36,700. After a lump-sum 22% federal withholding, 7.65% FICA, and $4,000 of COBRA for the next six months, you're looking at closer to $22,000 in your pocket. Know the real number before you sign the release.

Enter your annual salary and years at the company. Weeks per year tenure is your employer's severance formula (2-4 weeks per year is typical; executives sometimes get 4-8+). Choose lump sum or salary continuation (which typically withholds at your marginal rate, not the 22% flat rate).

Marginal rate input is used only if you chose salary continuation. COBRA monthly premium is usually the full unsubsidized health-insurance cost (typically $500-$900/mo for single coverage; $1,500-$2,200 for family). COBRA months is how long you think you'll need it.

• If you're also collecting UI, run the Unemployment Benefit Estimator.
• Plan your savings runway with the Job Search Burn Rate.
• If you're debating whether to take the severance or fight, the Sabbatical Financial Planner frames the opportunity cost.

The weeks-per-year-tenure input is where you have negotiating leverage. Standard formulas are usually the starting point, not the end point. Senior employees, employees with retaliation/discrimination claims, and anyone in a role that's hard to replace can often get the multiplier raised.

Lump sum vs salary continuation has real cash-flow implications. Lump sum pays today but withholds at 22% (often higher than your bracket, so you get a refund in April). Salary continuation keeps you on payroll — often with benefits — and withholds at your normal rate. For tax optimization, lump sum is often better if you're going to have a low-income year post-layoff.

• Forgetting COBRA cost. Your employer was paying most of it. COBRA is often $700-$1,500/mo out of pocket. Marketplace insurance with subsidies is usually cheaper.
• Signing too fast. You typically have 21+ days to review (45 days if it's a group layoff). Use the time. Negotiate.
• Not asking for extensions of benefits. Employers often offer 60-90 days of paid COBRA as part of severance — ask.
• Accepting the first offer without checking for leverage. Unpaid PTO, unvested equity, 401(k) contributions, bonus pro-ration — all negotiable.

Use the net number to calculate your runway with the Job Search Burn Rate. If severance + savings + UI = 6 months, you can be selective in your next role. If it's 2 months, you need to start applying today.

Consider whether to take the severance at all. In rare cases (serious legal claims, clear discrimination), the severance release signs away real money. Talk to an employment lawyer if anything about your termination feels wrong — most will consult for $0 initially.

A single calculator rarely answers a career question on its own. Severance Package Calculator gives you the core number for severance packages, but real decisions almost always involve two or three connected numbers. Here's how this tool fits into the broader picture and which other calculators pair well with it.

If you're evaluating a new role, the Severance Package Calculator output is most useful alongside the Job Offer Comparison Calculator (for total-comp apples-to-apples) and the Benefits Package Value Calculator (so the benefits side isn't an afterthought). Together they give you a three-number view: pure comp, total comp, and the severance packages angle this tool covers.

If you're in the middle of a negotiation, pair this output with the Salary Negotiation Calculator to set your ask, counter, and walk-away numbers. Both tools run in your browser, so you can stack them in separate tabs and run what-ifs during a live call.

If you're deciding between a stable employment path and a freelance or contract path, bring in the W-2 vs. 1099 Contractor Calculator and the Freelance Hourly Rate Calculator. The severance packages number will look very different under each tax and benefits structure.

Finally, if the question involves a longer time horizon — career change, pivot, sabbatical, retirement impact — use the Retirement Switch Calculator to model the 20-year compounded effect. Most career decisions that look like a one-year tradeoff are actually 20-year compounding bets; running that math often changes which option wins.

The default inputs on Severance Package Calculator cover the middle of the distribution — a typical situation with typical numbers. If your situation is at the edges, a few adjustments tend to matter more than the defaults suggest.

High-income edge cases. Once you're past the Social Security wage base ($176,100 for 2026), FICA withholding drops sharply — an extra dollar of wages over that threshold only pays 1.45% Medicare (plus 0.9% Additional Medicare over $200,000), not the full 7.65%. That changes the effective-tax picture meaningfully. If you're in the 32%+ federal bracket, state-and-local deductibility caps (SALT) and AMT drift also become relevant — the headline severance packages number may differ from your after-tax reality by 10-20%.

Low-income edge cases. At lower salary levels, the standard deduction ($16,100 for single filers in 2026, $32,200 married) and refundable credits (EITC, CTC) can swing effective tax rates into negative territory for some filers. The calculator doesn't model credits because they vary by household composition — consult a tax tool or CPA if your household is eligible.

Multi-state situations. If you're paid in one state and live in another, or if you moved during the year, you'll owe income tax in multiple jurisdictions with credits to prevent double taxation. The severance packages number from this calculator assumes a single state; if you're multi-state, expect a 2-5% effective-rate delta vs. the output here, mostly depending on which state is higher-tax.

Equity-heavy compensation. If RSUs or options are a meaningful chunk of your total comp, the calculator's base-salary-only view understates the real picture. Cross-reference with the RSU vs. Salary comparison and the Equity Vesting Schedule Calculator to get the full view.

Irregular income. If your income is lumpy — bonuses, commissions, book advances, distributions from an S-corp — the withholding picture gets more complex. Quarterly estimated payments (Form 1040-ES) are often required, and the Side Income Tax Estimator handles the self-employment side of the same problem.

When you're running severance packages math, certain patterns should trigger a second look. These aren't errors in the calculator — they're situations where the formula is right but the real world is complicated enough that the output needs a sanity check before you act on it.

• Results that feel too good to be true. If the Severance Package Calculator output is dramatically better than your gut expected, one of your inputs is wrong — usually the one you were least confident in. Go back and tighten that assumption.
• Narrow win margins. If the tool says Option A beats Option B by 2%, the decision is effectively a tie. Small changes in any input can flip it. Don't make a big career move on a 2% margin; either get better data or look at non-financial factors.
• Large negative outputs. If a career-change or ROI calculation shows a big loss, don't immediately conclude the path is bad. Run the horizon longer — some investments (degrees, certifications) don't pay back in the first 3-5 years but pay back very well over 15-20.
• Single-source input data. If your market-rate or benchmark input came from one Glassdoor page, it's probably wrong. Triangulate across levels.fyi, Payscale, a recruiter conversation, and recent friends' offers. Median of three sources is much more reliable than any single source.
• Stale assumptions. Tax tables, 401(k) limits, and COL indices change every year. This calculator uses 2026 values — if you're reading this in 2027+, verify the constants before trusting the output on tax-sensitive decisions.

If two or more red flags fire at once, treat the output as a rough estimate, not a decision-ready number.

Here are the 2026 reference numbers most relevant to severance packages calculations. Bookmark them; they show up in every comp and tax tool on the site.

• Social Security wage base: $176,100. Wages above this are not subject to the 6.2% SS tax component.
• Medicare rate: 1.45% on all wages, plus an additional 0.9% on wages over $200,000 (single) / $250,000 (married filing jointly).
• FICA total (W-2 employee side): 7.65% up to the SS wage base, 1.45% above it.
• Self-employment tax effective rate: 14.13% (= 15.3% × 92.35% after the half-SE deduction). Applied to net self-employment earnings.
• 401(k) elective deferral limit: $24,500 ($31,000 with age-50+ catch-up).
• Standard deduction (single): $16,100. Married filing jointly: $32,200.
• Federal supplemental withholding rate: 22% flat on bonuses and supplemental wages up to $1M annually; 37% above.
• Mileage deduction (business): $0.70 per mile (IRS 2026 standard rate).
• 2026 federal brackets (single): 10% up to $12,400; 12% to $50,400; 22% to $107,550; 24% to $205,300; 32% to $260,500; 35% to $651,250; 37% above.

These numbers feed every calculator in the Resume Tools suite, and the Severance Package Calculator tool specifically uses the ones relevant to severance packages. If the IRS releases adjusted numbers mid-year, we update the calculator within 48 hours of the official publication.

For any calculation tied to a state-specific number (UI cap, state income tax, paid family leave rate), look up your state directly — those vary too much to centralize. The tool's state-rate input lets you drop in the right number for your situation. State income tax ranges from 0% (TX, FL, WA, NV, SD, WY, TN, AK, NH) to 13.3% (CA) on high earners, so the state component can move the severance packages number by several percentage points depending on where you file.

One more reference worth keeping handy: the federal poverty level for 2026 sits at roughly $15,060 for a single household, $31,200 for a family of four. Some benefits, subsidies, and income-based programs (ACA premium tax credit, student loan payments under IBR/PAYE) index to multiples of this number. If your severance packages decision affects your household's modified AGI close to those thresholds, the marginal cost of an extra dollar of income may include lost benefits — a real but often invisible tax.

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