Severance Pay Tax Calculator
Severance is a supplemental wage. If it is paid separately, employers can withhold a flat 22% federal rate, 37% on the part above $1,000,000 in a year, plus Social Security and Medicare.
What the calculator assumes
Enter the severance as the bonus amount on a regular check, and pick the flat 22% method or the aggregate method. State supplemental rules are only built in where this site has a verified method; the result labels the rest as estimates. This is not legal or tax advice, and agreements can have special treatment such as deferral. See the bonus tax calculator for the same mechanics, and the take-home pay calculator for regular wages.
Watch it worked through
- Is Severance Pay Taxable? Yes, Here's How (YouTube Short)
Paycheck Zip videos use the same calculator as this page. Figures in a video are from the day it was made; the page is kept current.
Keep reading
Federal severance tax 2026: what severance keeps
| Severance | Federal at 22% | FICA | Kept before state tax |
|---|---|---|---|
| $1,000 | $220.00 | $76.50 | $703.50 |
| $2,500 | $550.00 | $191.25 | $1,758.75 |
| $5,000 | $1,100.00 | $382.50 | $3,517.50 |
| $10,000 | $2,200.00 | $765.00 | $7,035.00 |
| $25,000 | $5,500.00 | $1,912.50 | $17,587.50 |
State tax comes on top. Pick a state below for its paycheck calculator.
Questions
How is severance pay taxed?
As wages. Federal income tax is withheld at a flat 22% when severance is paid separately from regular pay, or by the aggregate method when it is added to a regular paycheck. Social Security and Medicare apply too.
Is the 22% my real tax?
No. It is withholding. Your tax for the year depends on your total income, and the difference comes back or is owed when you file.
Does severance pay Social Security tax?
Yes, until the wage base is reached for the year ($184,500 in 2026). Medicare applies to all of it.
Is a lump sum taxed differently from installments?
The withholding rules are the same for each payment. A lump sum can push more income into higher brackets for the year, which is what you settle when you file.
Does this cover unused vacation payout or a final paycheck?
Accrued vacation paid at termination is generally supplemental wages too. Use the same calculator by entering it as the bonus. State rules on final pay and supplemental withholding vary.