Category: Taxes

Understanding Severance Pay and Taxes Severance pay is a payment made to an employee when they leave their job, often due to layoffs, company restructuring, or mutual agreement. It's usually a lump sum payment based on factors like seniority, age, and job position. However, the tax implications of severance pay can be complex and affect the amount of money you take home. How is a Lump Sum Severance Payment Taxed? A lump sum severance payment is typically taxed at a rate of 30%. However, this doesn't necessarily mean you'll only pay 30%...