2026 · Pennsylvania
Pennsylvania severance pay tax
Federal 22% plus Pennsylvania's 3.1% supplemental rate. But neither is your real tax rate. Here's the real number.
Counts toward the $184,500 Social Security cap.
Wages, new job, spouse, sets your real tax rate.
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Pennsylvania layoff at a glance
| State tax on severance | Flat 3.1% supplemental withholding |
| State income tax | Flat 3.1% |
| Unemployment weekly max | $605 for up to 26 weeks |
| Unemployment taxed by Pennsylvania? | No |
How Pennsylvania withholds on severance
Pennsylvania withholds a flat 3.1% on supplemental wages like severance. On top of that, the federal government withholds a flat 22% (37% over $1 million) and FICA, 6.2% Social Security up to the $184,500 wage base plus 1.45% Medicare.
Pennsylvania taxes income at a flat 3.1%, which is the rate that applies to severance whichever way it's withheld. If you also claim unemployment, Pennsylvania pays up to $605 a week for up to 26 weeks, and does not tax it. That's the Pennsylvania layoff picture in one place, the severance tax here, the unemployment on its own Pennsylvania page.
Worked example: $40,000 severance in Pennsylvania
A single filer, $40,000 severance paid separately, with $60,000 of other 2026 income:
| Federal withholding (22%) | −$8,800 |
| FICA (Social Security + Medicare) | −$3,060 |
| Pennsylvania withholding | −$1,228 |
| Net check | $26,912 |
| What it actually costs in tax | $12,438 |
Over-withheld by about $650, expect roughly that back as a refund at filing. The withholding is a fixed rate; your actual tax is your marginal rate on the severance stacked on your other income.
Stacking Pennsylvania unemployment on top
Pennsylvania sizes your weekly check off your highest-earning quarter, up to $605 a week, mid-pack nationally (27th of 51). It adds $8 per dependent on top. Duration 18-26 (= credit weeks).
| Weekly benefit range | $68 - $605 |
| How the amount is set | Off your highest-earning quarter |
| Maximum duration | 26 weeks (18-26 (= credit weeks)) |
| Waiting week | Yes, one unpaid week |
| Dependent allowance | $8 per dependent |
| Taxed by Pennsylvania | No |
Stacked together, that $40,000 severance nets about $26,912 and Pennsylvania's unemployment can add up to $15,730 over 26 weeks, about 11 months of a $4,000 budget before you need a paycheck. File through Pennsylvania Department of Labor & Industry, Office of Unemployment Compensation; nail down the exact figure in the runway calculator.
Questions about Pennsylvania severance tax
Is severance taxed higher in Pennsylvania?
No. It's withheld at a flat 22% federally and 3.1% by Pennsylvania, but it's taxed as ordinary income at your normal rates. You settle up at filing.
Does Pennsylvania tax my severance?
Yes, Pennsylvania taxes severance as wages. Pennsylvania withholds a flat 3.1% on supplemental wages like severance.
Will I get a refund or owe more?
It depends on your bracket. The flat 22% over-withholds for lower earners (refund) and under-withholds for those in the 32 to 37% brackets (set aside the difference). Enter your numbers above to see which way it goes for you.
Your Pennsylvania layoff toolkit
- Pennsylvania unemployment benefits weekly amount and duration
- Runway calculator how long your money lasts
- Pennsylvania paycheck calculator take-home at your next job
- Pennsylvania 1099 tax if you go freelance
An estimate for the 2026 tax year. State supplemental figures from the verified dataset, last verified 2026-07-24. Nothing you enter is stored. Not tax advice.