Is severance pay required by law in the US?

In most US states, no. Severance pay is generally not required by federal or state law. The exception is New Jersey, which mandates severance for mass layoffs.

How is severance pay taxed?

Severance pay is taxed as supplemental wages at a federal flat rate of 22%, plus applicable state income taxes.

What is typical severance in the US?

The most common severance formula is 1-2 weeks of pay per year of service.

Can I negotiate my severance package?

Yes, all severance terms are negotiable including pay amount, benefits continuation, and non-compete clauses.

Does severance affect unemployment benefits?

It depends on your state and how the severance is structured. Lump-sum payments may delay benefits in some states.

USA Severance Pay Calculator 2025

Calculate your estimated severance package with our free calculator. Includes federal and state tax deductions for all 50 US states.

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Relocating or Choosing Between Offers?

Compare severance pay across different states to see which one offers better net pay after taxes.

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Severance Pay Calculator

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Enter total years worked at the company

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Accrued vacation days to be paid out

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Include Federal Supplemental Tax (22%)

Standard federal withholding for supplemental wages

How Severance Pay Works

Understanding your severance package is essential when transitioning between jobs.

Standard Formula

Most employers offer 1-2 weeks of pay for each year of service. This is not required by law but is industry standard.

Tax Implications

Severance is taxed as supplemental wages at 22% federal rate, plus applicable state taxes. Some states have no income tax.

State Laws Vary

Only New Jersey mandates severance by law. Other states follow at-will employment where severance is optional.

Severance Calculator by State

Select your state for specific tax rates, legal information, and frequently asked questions about severance pay.

Alabama 5% Tax Alaska No State Tax Arizona 2.5% Tax Arkansas 4.4% Tax California 9.3% Tax Colorado 4.4% Tax Connecticut 6.5% Tax Delaware 6.6% Tax Florida No State Tax Georgia 5.5% Tax Hawaii 8.25% Tax Idaho 5.8% Tax Illinois 4.95% Tax Indiana 3.05% Tax Iowa 6% Tax Kansas 5.7% Tax Kentucky 4% Tax Louisiana 4.25% Tax Maine 7.15% Tax Maryland 5.75% Tax Massachusetts 5% Tax Michigan 4.25% Tax Minnesota 7.85% Tax Mississippi 5% Tax Missouri 4.8% Tax Montana 6.75% Tax Nebraska 5.84% Tax Nevada No State Tax New Hampshire No State Tax New Jersey 8.97% Tax New Mexico 4.9% Tax New York 6.85% Tax North Carolina 4.75% Tax North Dakota 1.95% Tax Ohio 3.99% Tax Oklahoma 4.75% Tax Oregon 9.9% Tax Pennsylvania 3.07% Tax Rhode Island 5.99% Tax South Carolina 6.5% Tax South Dakota No State Tax Tennessee No State Tax Texas No State Tax Utah 4.65% Tax Vermont 8.75% Tax Virginia 5.75% Tax Washington No State Tax West Virginia 6.5% Tax Wisconsin 7.65% Tax Wyoming No State Tax

Frequently Asked Questions

Common questions about severance pay in the United States.