Severance calculator
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Severance pay questions
- How much severance should I get?
- There is no required amount: the Department of Labor says severance is a matter of agreement between an employer and an employee. A common formula is one week of pay per year of service (the most common formula in a 2024 survey of 125 Michigan employers, followed by two weeks), and senior roles often get more. Your contract, a company plan or the agreement you are offered sets the amount.
- Is severance pay taxed?
- Yes, as wages. Social Security and Medicare apply, and many employers withhold federal income tax at the flat 22% rate for supplemental wages (37% on the part over $1 million in a year). Your state may withhold too. The calculator shows these as withholding, which is a prepayment: your real tax is settled when you file.
- Does severance affect unemployment benefits?
- In some states it does. Choose your state in the calculator, or open its unemployment page, to see its own rule and the source. File right away either way and report the severance when asked.
- How long do I have to consider a severance agreement?
- If you are 40 or older and the agreement asks you to give up age-discrimination claims, at least 21 days (45 in a group layoff program), and then 7 days after signing to revoke. Enter the date you received the offer to see yours.
- Can I negotiate severance?
- Yes. Offers are often negotiable, especially the amount, months of health coverage and the timing of a bonus or equity vest. See the severance pay guide for a list of what to ask for.
More: severance pay: taxes, your agreement and what is typical, severance package: what it is and how to negotiate, unemployment benefits by state, health insurance after a layoff and the COBRA vs ACA calculator.
Plan the weeks after a layoff
Sources
Every rule and figure on this page was read from the sources below on October 27, 2026. How each state treats severance for unemployment comes from the Department of Labor’s comparison of state laws and each state agency, with the source shown on every state’s page. Tax and employment rules change, so check the linked pages for the current version before you decide.