Severance Pay Calculator
What a severance package actually leaves you with after withholding — which is less than most people expect, for a reason worth knowing.
Severance after tax, worked examples
| Weekly pay | Weeks | Gross | Withheld | Take-home |
|---|---|---|---|---|
| $1,000.00 | 4 | $4,000.00 | $1,186.00 | $2,814.00 |
| $1,000.00 | 12 | $12,000.00 | $3,558.00 | $8,442.00 |
| $1,500.00 | 8 | $12,000.00 | $3,558.00 | $8,442.00 |
| $2,000.00 | 12 | $24,000.00 | $7,116.00 | $16,884.00 |
| $2,500.00 | 26 | $65,000.00 | $19,272.50 | $45,727.50 |
Federal withholding only — your state may take more. Assumes the severance is paid separately from your final regular paycheck.
Questions
- How is severance pay taxed?
- Severance counts as supplemental wages. If it is paid as a separate cheque, your employer withholds federal income tax at a flat 22% — not the rate you normally see on your payslip. Social Security and Medicare are withheld in full on top of that.
- Why is my severance cheque so much smaller than I expected?
- Because of that flat 22% federal rate plus 6.2% Social Security and 1.45% Medicare. On $12,000.00 of severance that comes to roughly $3,558.00 withheld, leaving about $8,442.00.
- Do I get any of that withholding back?
- Possibly. The flat 22% is withholding, not your final tax bill. If your actual tax rate for the year turns out lower, the difference comes back as a refund when you file. If it turns out higher, you may owe more.
- Is severance pay subject to Social Security and Medicare?
- Yes. Severance is wages, so FICA applies in full — unlike some other termination payments. Social Security stops once your wages for the year pass $184,500.00, so if you have already earned that much, only Medicare is taken.