What are the state tax implications of severance pay?

What are the state tax implications of severance pay?

Severance pay is typically considered taxable income at the federal and state levels. Each state has its own tax rules.

Are there any states that don't tax severance pay?

Yes, some states, like Texas and Florida, do not have a state income tax, so severance pay wouldn't be taxed there.

How is severance pay taxed in California?

In California, severance pay is subject to state income tax and is treated as regular wages for tax purposes.

Can I deduct any expenses related to my severance pay?

Generally, severance pay is fully taxable, and you cannot deduct expenses related to it unless they qualify under specific tax rules.

What should I do if I think my severance pay was taxed incorrectly?

If you believe your severance pay was taxed incorrectly, you should contact your employer's payroll department and consult a tax professional.