JW, how is severance taxed? What about the PTO payout? Is it like our bonus where we can anticipate only seeing 50-60% of the award?
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Severance is paid (and taxed) as a lump sum similar to a bonus minus espp, benefits,, 401k, etc
22% for severance under 1M
38% for severance over 1M
Severance won’t deduct health and other benefits. No espp withhold, no 401k. So while you pay the normal fed and state taxes, you might see a bit more to your pockets.
From H&R Block:
Employers generally use two different ways to pay your severance:
As part of your normal wages. That means all the normal withholding (such as federal income tax based on your completed W-4, state income tax, Social Security and Medicare taxes) that applied to your paycheck, will also apply to your severance payment.
Apart from your normal wages. In this case, a flat 22% withholding rate for federal income tax (in place of the normal federal income tax withholding that would be calculated based on your W-4) would generally apply.
—-I’d assume it will be given as standard payroll and taxed as income rather than lump sum—-
For Oregon state tax it would be your income tax bracket.
Severance is taxed at the same % as fed and state income tax. Same for PTO.