Methodology

Severance benchmark bands#

The calculator surfaces a typical / good / aggressive benchmark band based on publicly reported employer practice. These bands reflect what employers have actually paid in publicly reported reductions — CEO memos, SEC filings, Cal-WARN filings, and tier-1 news reports — not statutory entitlements. Bands are not predictions of what any specific employer will offer; they describe the distribution of reported outcomes. Per-company specifics are documented on individual company pages, each with primary citations.

Federal supplemental withholding#

Severance is supplemental wages under IRS regulation. Employers withhold at a flat 22% on supplemental wages up to $1,000,000 cumulative for the year, and 37% on amounts above that threshold (the threshold applies across all supplemental wages paid by the same employer in the calendar year, not severance alone).

FICA and Medicare#

Social Security tax is 6.2% on wages up to the annual wage base ($184,500 for 2026). Medicare is 1.45% on all wages with no wage cap. An Additional Medicare Tax of 0.9% applies to wages above $200,000 (single, head-of-household) or $250,000 (married filing jointly) — the employer withholds the additional 0.9% on individual wages over $200,000 regardless of filing status; the recipient reconciles on the tax return.

State supplemental withholding#

State supplemental withholding varies. The calculator uses the state-specific rate set by the relevant state revenue department for the year of payment. Documented examples: California 6.6% on severance (10.23% on stock/bonus) per CA EDD DE 44; New York 11.70% per NY Pub NYS-50, with NYC residents additionally subject to approximately 4.25% city supplemental; Texas, Florida, and Washington have no state income tax. See per-state pages for primary citations.

Per-state references: California, New York, Texas, Florida, Washington.

COBRA cost#

COBRA permits qualified beneficiaries to continue group health coverage after a qualifying event. The maximum charge is 102% of the applicable group rate (the full premium plus a 2% administrative surcharge). Standard duration is 18 months for termination-of-employment events, with extensions to 29 months for Social Security-determined disability and to 36 months for certain dependent events. The calculator estimates monthly COBRA cost from the full group premium times 1.02 multiplied by the elected coverage duration.

WARN Act applicability#

The federal WARN Act applies to employers with 100 or more full-time employees and requires 60 days advance written notice for a covered mass layoff or plant closing. A covered event is one in which either 500+ employees are affected at a single site of employment over a 30-day period, or 50+ employees are affected AND those affected constitute at least 33% of the workforce. Where state mini-WARN statutes are stricter, the state-level threshold governs. The calculator flags federal WARN at the standard thresholds and points to per-state pages for state mini-WARN (Cal-WARN, NYS-WARN, WA mini-WARN, etc.).

OWBPA review windows#

The Older Workers Benefit Protection Act amends the ADEA. For employees age 40 or older asked to waive age-discrimination claims in a severance release, the waiver is enforceable only if the employee receives at least 21 days to consider the agreement (45 days for group exit incentive programs) and 7 days after signing to revoke. Group exits additionally require disclosure of the ages and job titles of all individuals in the decisional unit who were and were not selected. The calculator surfaces 21 vs 45 day requirements based on whether the input flags a group exit.

Section 280G parachute flag#

IRC § 280G governs golden parachute payments to disqualified individuals — officers, 1%-or-more shareholders, and the highest-paid employees — that are contingent on a change in control. If aggregate parachute payments reach or exceed 3× the disqualified individual’s base amount (the 5-year average W-2 compensation), the excess over 1× base amount is non-deductible to the corporation and the recipient owes an additional 20% excise tax under § 4999. The calculator flags scenarios at or above the 3× threshold; for executive scenarios it also estimates the excess-parachute portion.

Equity treatment at termination#

Equity treatment at termination is governed primarily by the grant agreement and the plan document, not by statute. The calculator surfaces standard defaults: unvested RSUs and options typically forfeit at termination unless the grant or severance agreement provides for acceleration; ISOs must be exercised within 90 days of termination to retain their incentive tax treatment under IRC § 422; NSOs follow the grant’s post-termination exercise window. Where the grant document overrides these defaults, the document governs.