Accurately predicting the compaction settlement under the impact load of dynamic compaction has an important impact on the design and construction of dynamic compaction. The calculation of subgrade soil settlement under static load generally adopts the layered summation method in China. The layered summation method is simple and practical with rich engineering experience. According to the analysis of the dynamic stress in the soil-hammer contact, the additional stress distribution in the soil determined by the elastic theory under static load is comparable to the vertical dynamic stress distribution under the impact load of dynamic compaction. Based on the layered summation method, a practical calculation method for the compaction settlement of dynamic compaction is proposed. By using a portable drop hammer deflection test and a penetrometer test, a preliminary discussion was conducted on the dynamic load parameters involved in the calculation method, as well as the relationship between the dynamic rebound modulus and compression modulus. Meanwhile, a calculation method for the average contact dynamic stress of the hammer was provided. Lastly, a comparison between the measured and estimated settlement of three engineering examples was carried out in order to confirm the efficacy of the suggested practical calculation approach for compaction settlement. The results show that this method can effectively capture the settlement characteristics of subgrade soil under different energy levels of compaction. For dynamic compaction projects with low, medium, and high energy levels, the errors between calculated settlement and measured settlement are 2.28%, 2.27%, and 9.89%, respectively. This practical calculation method is simple and convenient to use, which provides a new approach for calculating the settlement of subgrade soil under impact loads.