Income Withholding

Severance Pay

Effective September 1, 2007, a Texas employer who has received an order or writ of withholding shall withhold from an employee’s severance pay an amount equal to the amount the employer would have withheld if the severance pay had been paid as the employee’s usual earnings. [TFC § 158.214]

For example, if the gross severance pay is $10,000 and the employee’s gross earnings are $2,000 for the normal two week pay period, the severance package equals five times the employee’s biweekly earnings. Therefore, the employer should withhold from the severance payment an amount equal to five times the biweekly withholding amount stated in the income withholding order.

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