2026 tax year · laid off
Severance pay tax calculator
The 22% taken out of your severance is withholding, not your tax bill. Depending on your income it over- or under-shoots. This works out what you owe.
Severance details
Updated for 2026 rulesCounts toward the $184,500 Social Security cap.
Wages, new job, spouse, sets your real tax rate.
Withholding is not your tax
Nothing you enter is stored or sent anywhere. Press Calculate to see the result.
Severance is "supplemental wages," so an employer withholds a flat 22% for federal tax (37% on anything over $1 million) when it's paid separately. That flat rate ignores your actual bracket: it over-withholds if you're in the 10 to 22% range (refund at filing) and under-withholds if you're in the 32 to 37% range (a bill you should set aside for now). This shows the withholding and your estimated real liability side by side.
The same $40,000 severance, two incomes
Why "22% withheld" tells you almost nothing on its own, a single filer in California, $40,000 severance:
| Other 2026 income | Withheld (federal) | Actual liability | At filing |
|---|---|---|---|
| $20,000 | $8,800 | $9,485 | refund ≈ $5,015 |
| $400,000 | $8,800 | $21,463 | owe ≈ $6,963 more |
Same $40,000, same $8,800 withheld. But the low earner gets money back and the high earner owes thousands more. The withholding rate is fixed; your tax rate is not.
Questions
Is severance taxed at a higher rate?
No. It's withheld differently (a flat 22%), but it's taxed as ordinary income at your normal rates. The flat withholding just isn't your final tax, you settle up at filing. See the myth in the table above.
Does FICA come out of severance?
Yes, 6.2% Social Security up to the $184,500 wage base (wages already earned from the same employer this year count toward it) and 1.45% Medicare with no cap, plus 0.9% additional Medicare on wages over $200,000 ($250,000 married).
What if it's paid with my final paycheck?
Then the aggregate method applies instead of the flat 22%, the employer withholds as if the combined amount were regular wages, which usually lands much closer to your real rate. Pick that mode above to see it.
Severance tax by state
Federal withholding is the same flat 22% everywhere; the state cut is not. Each state page runs the numbers with that state's 2026 withholding:
- Alabama severance tax
- Alaska severance tax
- Arizona severance tax
- Arkansas severance tax
- California severance tax
- Colorado severance tax
- Connecticut severance tax
- Delaware severance tax
- Florida severance tax
- Georgia severance tax
- Hawaii severance tax
- Idaho severance tax
- Illinois severance tax
- Indiana severance tax
- Iowa severance tax
- Kansas severance tax
- Kentucky severance tax
- Louisiana severance tax
- Maine severance tax
- Maryland severance tax
- Massachusetts severance tax
- Michigan severance tax
- Minnesota severance tax
- Mississippi severance tax
- Missouri severance tax
- Montana severance tax
- Nebraska severance tax
- Nevada severance tax
- New Hampshire severance tax
- New Jersey severance tax
- New Mexico severance tax
- New York severance tax
- North Carolina severance tax
- North Dakota severance tax
- Ohio severance tax
- Oklahoma severance tax
- Oregon severance tax
- Pennsylvania severance tax
- Rhode Island severance tax
- South Carolina severance tax
- South Dakota severance tax
- Tennessee severance tax
- Texas severance tax
- Utah severance tax
- Vermont severance tax
- Virginia severance tax
- Washington severance tax
- Washington DC severance tax
- West Virginia severance tax
- Wisconsin severance tax
- Wyoming severance tax
Next steps
- Health coverage COBRA vs the 2026 marketplace
- Unemployment your weekly benefit and duration
- Runway how long your money lasts
- Estimated tax penalty if you under-withheld
An estimate for the 2026 tax year on your own inputs. Nothing you enter is stored or sent anywhere. Not tax advice.