Taxed at a Different Rate?

[Ruken]

@thelurkinghorror

Supplemental wages including severance, bonuses, commissions, etc. are withheld at 25%. Their tax is determined the next April 15, so you may get some of it back, depending.

@watchwolf49

40% tax doesn’t seem all that much if that includes all taxes … 25% Federal income tax plus 7.5% SS tax and another 7.5% State income tax … and like pointed out above … withholding taxes are just estimates, once you have your tax returns filled out, then everything is squared …

Surely this is the answer. I’m pretty sure I experienced the same when I sold vacation time back to my employer.