Worked example · updated 2026-08-01

Laid off in Texas after six years

What a two-weeks-per-year severance package is worth after withholding, what Texas unemployment adds on top, and what keeping the health plan would cost — the three numbers that set a runway.

Illustrative worked example. The household is hypothetical; every figure is computed by the same verified engines and rule packs the calculators use.

The situation

A hypothetical software support specialist in Austin earning $90,000 is laid off in a company-wide reduction after six years. The employer offers two weeks of severance per year of service, paid as a lump sum. The employee had been paid $52,000 in wages so far this year, and their W-2 shows $19,200 in Box 12 code DD for employer-sponsored health coverage.

What goes in

Salary: $90,000 ($1,730/week)
Years of service: 6
Severance formula: 2 weeks per year
Wages paid this year before severance: $52,000
W-2 Box 12 code DD: $19,200

What comes out

Severance after withholding

$14,605

Severance weeks earned2 weeks per year of service: 12 weeks
Gross severance: $20,760
Federal supplemental withholding22% flat rate: $4,567
Social Security + Medicare: $1,588
Texas weekly unemployment benefitup to 26 weeks: $605
Maximum benefits available: $15,730
COBRA premium102% of the full premium: $1,632/mo

Verified 2026-07-31 against Publication 15 (2026), (Circular E), Employer's Tax Guide (effective 2026-01-01)

Verified 2026-07-31 against Texas Workforce Commission Unemployment Benefit Services - Unemployment Benefits Estimator (current minimum/maximum WBA) + TWC 'Especially for Texas Employers': Unemployment Insurance Law - Eligibility Issues (effective 2026-01-01)

Verified 2026-07-31 against 26 CFR 54.4980B-8 (COBRA premiums), with 54.4980B-6 (election period) and 54.4980B-7 (duration) (effective 2026-01-01)

Severance is quoted in weeks, but paid after withholding

Six years at two weeks per year produces twelve weeks of severance, which on a $1,730 weekly salary is a substantial gross figure. Because it is paid separately from regular wages it is supplemental pay: the employer commonly withholds federal income tax at the flat supplemental rate the IRS publishes, plus Social Security and Medicare. The net figure is what actually funds the months ahead, and it is meaningfully smaller than the number in the offer letter.

Texas benefits are computed from a window that excludes recent pay

Texas divides the highest-earning base-period quarter by a statutory divisor and clamps the result to its published minimum and maximum. The base period is the first four of the last five completed calendar quarters, so wages earned in the weeks immediately before the layoff typically fall outside it. Texas caps the weekly amount, which is why a $90,000 salary and a much lower one can produce a similar benefit.

Health coverage is usually the largest new line item

COBRA lets a plan charge the full premium — the employer's share included — plus a small administrative margin capped by statute. Box 12 code DD reports that full annual cost, so dividing it by twelve and applying the cap gives a close estimate. The result is often several times the payroll deduction the employee was used to seeing, which is why it dominates a post-layoff budget.

Texas does not offset severance against benefits, but many states do

Whether severance reduces or delays a claim is a state-by-state question that turns largely on how the employer allocates the payment. That single rule can change the sequencing of a claim by months, which is why the severance-versus-unemployment tool quotes each agency's own wording rather than a general rule.

What this example is good for

The three figures interact: severance after tax covers a fixed number of months, unemployment extends it at a much lower rate, and the health premium raises the monthly burn the whole time. Planning from the month the money runs short is more useful than planning from the total, because that date is what a job search has to beat.

Run this with your own numbers — Runway Planner

Put the whole layoff picture on one timeline: severance after withholding, unemployment benefits for your state, COBRA premiums, and monthly expenses. The planner shows how many months the money covers, when each source runs out, and exports the deadlines to your calendar.

Calculators behind this example

Severance Pay

Estimate what a severance package is worth before and after tax. Enter weekly pay, years of service, and the employer’s weeks-per-year formula to see the gross amount, the 22% federal supplemental withholding, Social Security and Medicare, and the net that actually lands in your account.

COBRA Cost

Estimate what continuing your employer health plan under COBRA would cost. Plans may charge up to 102% of the full premium, so this starts from Box 12 code DD on your W-2 — the total cost of your coverage — and shows the monthly premium and the full-period total.

Runway Planner

Estimate only — not legal, tax, or financial advice. Only DOL-ETA can determine your actual amounts.

Official source: U.S. Department of Labor — unemployment insurance ↗

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🧳Laid off in Texas after six years