Severance tax rate
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gavila818
Member Newcomer
Hello looking for ARIZONA State tax rate for severance payments
Answers
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Hi Gavila,
In the state of Arizona, severance pay is taxed at the same marginal tax rates as your other sources of earned income. However, if you get a large lump sum as a severance, the payroll company may need to withhold more income taxes to make up the differences in the amount and timing. For example, you may pay the higher rate of 2.98%.
According to reports, AZ will impose a flat tax in 2023 and later years.
For federal purposes you may see withholdings of 22% on your severance pay, which may be more or less that your regular wages.
