What this calculator means and how to use it
A reading guide for the numbers above — what the calculator computes, what it approximates, and what it deliberately does not try to answer.
What this calculator does
A severance offer is rarely a single number. It is a gross figure, a withholding stack, a notice-period question, a benefits-continuation question, and — for employees aged 40 or older — a statutory review window that the employer is required by federal law to provide. The calculator above takes the inputs an employee can read off an offer letter or pay stub and returns the after-tax cash, the WARN Act and state mini-WARN posture of the layoff, the OWBPA review and revocation windows where applicable, the estimated COBRA premium, a Section 280G parachute flag for change-in-control scenarios, and standard equity-at-termination defaults under IRC § 422 (ISOs) and § 83. Every output is tied to a primary source on the methodology page.
How it calculates your after-tax severance
The after-tax figure is the gross severance reduced by three withholding layers, applied in the order a payroll system applies them.
The federal layer is supplemental-wage withholding. Per IRS Publication 15 (Circular E), severance is supplemental wages and is withheld at a flat 22% on cumulative supplemental wages up to $1,000,000 in the calendar year and a mandatory 37% on amounts above that threshold. The threshold runs across all supplemental payments from the same employer in the year, not severance alone — a mid-year bonus already paid counts against the cap.
The state layer is the state-specific supplemental rate. California withholds 6.6% on severance (and 10.23% on the bonus / stock-comp portion of a separation package) per EDD DE 44. New York withholds 11.70% per NY Pub NYS-50, with New York City residents additionally subject to roughly 4.25% city supplemental withholding. Texas, Florida, Washington, and the other no-income-tax states withhold nothing at the state layer. The per-state pages under /states document the rate and its primary citation for each jurisdiction.
The FICA layer is statutory and uniform. Social Security tax is 6.2% on wages up to the 2026 wage base of $184,500 per the SSA cost-of-living announcement. Medicare is 1.45% on all wages with no cap. An Additional Medicare Tax of 0.9% applies to individual wages above $200,000 in the calendar year under IRC § 3101(b)(2), regardless of filing status — the employer withholds the surtax once the employee crosses $200,000 in cumulative Medicare wages, and the recipient reconciles on Form 1040.
The WARN Act and OWBPA analysis
Two federal statutes govern the timing and the paperwork of a layoff, and the calculator surfaces both.
The Worker Adjustment and Retraining Notification Act — 29 U.S.C. §§ 2101–2109, commonly called WARN — requires 60 days of advance written notice for a covered mass layoff or plant closing. The federal statute applies to employers with 100 or more full-time employees and is triggered when either 500 or more employees are affected at a single site of employment over a 30-day period, or 50 or more employees are affected and those employees constitute at least 33% of the workforce at the site. Where notice is not given, the employer owes pay and benefits in lieu for each day of the missed notice period. Several states have lower thresholds and longer notice periods than the federal floor — Cal-WARN covers employers with 75 or more employees and lowers the layoff trigger; NYS-WARN drops the threshold to 50 employees and stretches the notice requirement to 90 days; Illinois has its own mini-WARN. The calculator flags the federal posture and links to the per-state page for the stricter state rule.
The Older Workers Benefit Protection Act — 29 U.S.C. § 626(f), which amends the ADEA — controls the enforceability of a severance release that waives age-discrimination claims. For an employee aged 40 or older, the waiver is enforceable only if the employer gives at least 21 days to consider the agreement (45 days when the layoff is a group exit incentive program) and 7 days after signing to revoke. Group exits also require disclosure of the ages and job titles of every employee in the decisional unit who was and was not selected. The calculator surfaces 21 vs 45 days based on whether the input flags a group exit; the 7-day revocation window is statutory and cannot be waived.
What the calculator approximates
Several outputs are estimates rather than exact figures, and a careful reader should treat them as starting points.
Social Security withholding assumes a year-end layoff. The calculator applies the 6.2% OASDI rate to the full severance amount, which is correct for an employee whose year-to-date Social Security wages are still below the $184,500 wage base. A high-earning employee laid off in January — whose severance plus the year's earnings will exceed the wage base in the same paycheck — will see OASDI cut off at the cap. A high-earning employee laid off in December has usually already crossed the wage base on regular wages, and the severance check sees no further OASDI at all. The results panel flags this assumption; the disclaimer there explains when the displayed FICA number may run high or low.
The 280G parachute threshold uses current base salary as a proxy. IRC § 280G defines the trigger as 3× the disqualified individual's base amount, where base amount is the 5-year average W-2 compensation as defined in the statute. The calculator does not collect five years of W-2 history; it uses current base salary as a working approximation. This is conservative for executives whose compensation has grown materially over five years and aggressive for those whose compensation has fallen. Any actual 280G analysis at a change-in-control event should be redone by a tax adviser with the statutory base amount.
State supplemental rates are the published per-state rate only. The calculator does not handle local-income-tax jurisdictions: New York City's roughly 4.25% supplemental withholding, Philadelphia's city wage tax, Yonkers, and the various Ohio and Pennsylvania municipal taxes are not included in the state line. Equity treatment assumes standard plan language — typical 90-day post-termination exercise for ISOs under IRC § 422, forfeiture of unvested RSUs and options at termination, and Section 83 treatment for restricted property. Any specific grant agreement or plan document overrides these defaults, and many tech-company plans extend the post-termination window or accelerate vesting on involuntary termination without cause.
Worked example
A concrete case clarifies the layering. A California software engineer earning $185,000 base salary, four years of tenure, receiving an 8-week severance package, with the layoff falling at year-end.
Gross severance: $185,000 ÷ 52 × 8 ≈ $28,461. Federal supplemental withholding at 22% per IRS Pub 15 takes $6,261. California supplemental withholding at 6.6% per EDD DE 44 takes $1,879. FICA, assuming the employee has already crossed the $184,500 Social Security wage base on regular year-to-date wages, runs only the 1.45% Medicare line for $413, plus the 0.9% Additional Medicare surtax on the slice above $200,000 cumulative Medicare wages — roughly $256 here. CA SDI at 1.3% on the severance adds $370. Net cash to the employee: approximately $19,282.
The same employee laid off in January, with no prior year-to-date Social Security wages, sees an additional 6.2% OASDI withholding on the full $28,461 — about $1,764 more, dropping net cash closer to $17,500. The same employee laid off in California in October, with year-to-date Social Security wages of $160,000, sees OASDI applied only to the slice that lands under the $184,500 cap (about $24,500 of the severance is taxed at 6.2% and the rest is uncapped) — a partial outcome between the two extremes. The same base inputs in Texas would drop the state line to $0 and add roughly $1,879 of net cash. Use the calculator above to walk the same numbers for your specifics.
What this is not
The calculator and this editorial do not provide legal, tax, or financial advice. The outputs are benchmarks and statutory references computed from public sources; the calculator cannot read the separation agreement on the table, cannot evaluate a state mini-WARN claim against the specific facts of a layoff, cannot advise on whether to sign an OWBPA-covered release waiving age-discrimination claims, cannot evaluate an EEOC charge or a state-agency complaint, and cannot model a 280G analysis against actual five-year W-2 history. Consult a licensed employment attorney in the relevant state before signing any separation agreement or release, a CPA for the final tax reconciliation, and the employer's benefits administrator or a COBRA-experienced broker for the actual premium figure. See the about page for the site's editorial standards, the FAQ for the most common questions, and the scenarios library for worked examples covering PIPs, H-1B exits, ISO / AMT timing, COBRA-vs-ACA cost comparisons, and McLaren Macomb confidentiality limits.