Taxed at a Different Rate?

The amount that will come out of your severance pay for taxes may differ from the “normal” rate, because the severance pay may have been a higher total than an average paycheck. The percentage amount withheld for FIT (and SIT, usually) is increased for higher rates of pay because the federal income tax is progressive: the more you earn, the higher the effective overall rate will be. Without getting into too much complication, when figuring withholding on a given paycheck, the company will assume you are earning that paycheck for an entire year’s worth of paychecks, and withhold accordingly. So if you suddenly get a significantly increased check (bonus, severance pay covering more than one normal check’s period, etc.), the withholding will be based on the assumption that you would get that amount for an entire year’s worth of paychecks.

As noted by Shagnasty, it’s irrelevant to the overall tax owed at the end of the year; it just increases the likelihood of getting a refund, and increases the amount of that refund.