2026 Severance & Layoff Runway Calculator
Calculate your exact post-tax net severance package, factor in state unemployment benefit caps, COBRA health continuation costs, and determine your exact runway months.
Severance & cash runway calculator
IRS 22% supplemental withholding, plus sourced state unemployment capsWhat severance is really worth after tax
Experiencing a sudden workforce layoff creates immediate financial and legal decisions. Understanding how the IRS taxes lump-sum packages, when state unemployment insurance begins, and how COBRA impacts monthly cash burn is essential to calculating your true survival runway.
What each field means
Annual base salary
Your pre-tax annual base pay (excluding non-guaranteed bonuses, commissions, and unvested stock options).
Years of tenure
Your total length of continuous service. Most employers multiply weeks of severance by completed years of tenure.
Severance weeks per year
The standard severance multiple offered by your employer (1 week is standard; 2 weeks is typical in tech/corporate; 3–4 weeks for executives).
Accrued unused PTO
Earned vacation days that have not been taken. In states like California, Colorado, and New York, employers are legally required to pay out all accrued PTO at 100% value upon separation.
State unemployment insurance
Pick your state to apply its maximum weekly benefit. The six listed here are read off the Department of Labor's January 2026 comparison table; each state's maximum is what someone at or above the wage ceiling receives, and a lower earner receives less. Massachusetts pays a dependency allowance on top of the figure shown. If your state isn't listed, choose the last option — the runway you see will then exclude unemployment income entirely, which understates it rather than flattering it.
Monthly living expenses and health cover
Your baseline monthly survival costs plus health coverage. COBRA charges the full premium your employer was paying, plus an administrative margin, so it usually lands at several times the payroll deduction you are used to seeing. Your HR team can quote the exact figure. Ask before you sign anything.
The formulas, and how severance is taxed
Severance payouts are classified under IRS Publication 15 as supplemental wages. By default, federal payroll systems withhold a flat 22% federal tax (or 37% on supplemental wages above $1,000,000 ) plus 7.65% FICA (Social Security + Medicare). State income tax is withheld on top of this and is not modelled below:
1. Weekly Salary = Annual Base Salary / 52
2. Daily PTO Rate = Annual Base Salary / 260 Working Days
3. Gross Severance Package = Weekly Salary × (Tenure Years × Severance Weeks Offered)
4. Gross PTO Payout = Daily PTO Rate × Accrued PTO Days
5. Total Gross Payout = Gross Severance + Gross PTO Payout
6. Statutory Tax Withholding = Total Gross Payout × 29.65% (22% Supplemental + 7.65% FICA)
7. Net Severance Payout = Total Gross Payout − Statutory Tax Withholding
8. Total Available Cash = Net Severance Payout + Existing Emergency Savings
9. Monthly State UI Benefit = (Weekly State UI Cap × 52) / 12
10. Adjusted Monthly Burn = (Monthly Expenses + COBRA Premium) − Monthly State UI Benefit
11. Financial Runway (Months) = Total Available Cash / Adjusted Monthly Burn Two worked examples
Tech lead laid off after four years, $135,000 salary
- Base Salary: $135,000 ($2,596/wk)
- Tenure & Severance: 4 Years × 2 Wks = 8 Weeks ($20,769 Gross)
- Accrued PTO: 15 Days × $519/day = $7,788 Gross
- Total Gross Payout: $28,558
- Tax Withholding (29.65%): $8,467
- Net Severance Payout: $20,090
- Existing Savings: $25,000
- Total Cash Pool: $45,090
- Monthly Expenses + COBRA: $5,800/mo
- California UI Benefit: +$1,950/mo ($450/wk)
- Net Monthly Cash Burn: $3,850/mo
- Total Financial Runway: 11.7 Months (Very Strong)
Florida associate laid off after 18 months, $68,000 salary
- Base Salary: $68,000 ($1,308/wk)
- Tenure & Severance: 1.5 Years × 1 Wk = 1.5 Weeks ($1,962 Gross)
- Accrued PTO: 8 Days × $262/day = $2,092 Gross
- Total Gross Payout: $4,054
- Tax Withholding (29.65%): $1,202
- Net Severance Payout: $2,852
- Existing Savings: $6,000
- Total Cash Pool: $8,852
- Monthly Expenses + COBRA: $3,600/mo
- Florida UI Benefit: +$1,192/mo ($275/wk max)
- Net Monthly Cash Burn: $2,408/mo
- Total Financial Runway: 3.7 Months (Critical)
What you're owed, and what you can negotiate
WARN Act notice
Under the Worker Adjustment and Retraining Notification (WARN) Act (20 U.S.C. § 2101), employers with 100 or more full-time workers must give 60 days of advance written notice before a plant closing or a qualifying mass layoff. An employer that fails to notify owes back pay and benefits for each day of the violation, capped at the length of the notice period. Whether a particular layoff qualifies turns on how many people lose their jobs at one site and what share of the workforce they represent, so check the DOL guidance against your own numbers.
Your review window before signing
Under the Older Workers Benefit Protection Act (OWBPA), employees aged 40 and older are legally entitled to 21 days to review a severance agreement (45 days in group layoffs) and 7 days to revoke their signature after signing. Never feel pressured to sign on the spot.
COBRA or the ACA marketplace
While COBRA lets you maintain employer coverage for up to 18 months, you must pay 102% of the premium. Job loss qualifies as a Qualifying Life Event (QLE) triggering a 60-day Special Enrollment Window to enroll in an Affordable Care Act marketplace plan. Price both before you elect COBRA. A subsidised marketplace plan is often the cheaper of the two, and that window closes long before your COBRA coverage does.
Common questions
Does receiving severance pay delay my unemployment benefits?
It depends on state law. In California, New York, and Texas, severance payments generally do not delay or reduce your state unemployment benefits as long as the severance agreement fully terminates the employment relationship. In some states, severance is allocated across pay periods and delays the start of UI payments.
Why was my severance taxed at 22% instead of my standard tax bracket?
IRS regulations require employers to treat lump-sum severance payouts as supplemental wages subject to mandatory flat withholding of 22% federal tax plus 7.65% FICA. When you file your annual tax return, your actual liability is recalculated based on your total annual earnings, and any excess withholding is refunded.
Can I negotiate for a higher severance package?
Yes. While standardized corporate layoff packages have fixed formulas, you can frequently negotiate non-cash benefits: requesting the employer subsidize COBRA premiums for 3 to 6 months, accelerating stock vesting schedules, keeping company laptop hardware, or ensuring mutual non-disparagement clauses.
What is the difference between severance pay and WARN Act pay?
WARN Act pay is a mandatory legal penalty for failing to give 60 days of advance notice before a plant closing or mass layoff. Severance pay is a discretionary package offered by employers in exchange for signing a general release of legal claims.
Primary Statutory Sources & Verification
Programmatically audited against federal & state regulatory recordsThinking about contract work instead?
Benchmark your hourly billing rate with our Freelance Hourly Rate Calculator to replace your lost corporate salary.