topic Severance Payments in Deductions & credits

Severance Payments

Lindsayj1852 — Tue, 24 Feb 2026 07:11:18 GMT

After a recent layoff, I have started receiving severance payments from my employer. The payments are weekly, the same gross amount as when I was employed. But these payments are being taxed at a higher rate. As far as I understand severance is only taxed differently if paid in a lump sum (due to tax year estimating). When I reach out to payroll, they only respond with “severance pay is taxed higher”.
I am in Georgia, the severance agreement states that “payments are to be made for 12 weeks equaling last recorded salary gross pay for a total of $****”.
Is there something I am missing? Or do I get the tax difference back when I file? Just doesn’t sound like they are applying the taxes correctly.

Re: Severance Payments

VolvoGirl — Mon, 07 Aug 2023 16:32:36 GMT

That is just withholding to cover the tax. Yes you can get a refund if your total withholding for the year is more than the tax on all your income.

Re: Severance Payments

dmertz — Mon, 07 Aug 2023 17:59:51 GMT

Severance pay is considered to be supplemental wages. If not paid concurrently with regular wages the employer will generally withhold federal taxes at a flat 22% as instructed in IRS Pub 15. As VolvoGirl said, any excess tax withholding determined on your tax return for the year will become your tax refund.