Does Texas require severance pay?

No. Texas does not have a state-mandated severance statute, and there is no Texas mini-WARN. Severance is entirely employer-discretionary unless your employment contract or company policy requires it.

How is severance taxed in Texas?

Texas has no state income tax, so only federal taxes apply. The federal supplemental withholding rate is 22% on amounts under $1,000,000 cumulative for the year, 37% above. Plus FICA (Social Security 6.2% up to $176,100 wage base, Medicare 1.45% on all wages, plus 0.9% additional Medicare on wages above $200,000 single or $250,000 married filing jointly).

Does federal WARN apply to my Texas layoff?

Federal WARN applies if (a) your employer has 100 or more employees and (b) the layoff at your single site of employment affects 50 or more employees AND at least 33% of the workforce, OR affects 500 or more employees regardless of percentage. If federal WARN applies, you are entitled to 60 days advance notice or pay-in-lieu.

Can I file for unemployment in Texas while receiving severance?

Yes, but the timing matters. Texas Workforce Commission rules treat severance differently depending on whether it is a lump sum or paid in installments. Generally, lump-sum severance does not delay unemployment benefits, while installments paid as "wages in lieu of notice" may delay benefits dollar-for-dollar. Apply when you separate; TWC will determine the impact.

Are non-competes enforceable in Texas after a layoff?

Yes, but only if reasonable in time, geographic area, and scope of activity (Tex. Bus. & Com. Code § 15.50). Texas courts will enforce post-employment non-competes that are tied to legitimate business interests like trade secrets or customer goodwill, but unreasonable restraints are reformed or struck down. Severance is often used as consideration for a non-compete in Texas; you can negotiate for a narrower non-compete in exchange for signing the release.

Can I collect Texas unemployment while receiving severance?

Texas Workforce Commission rules: lump-sum severance generally does not delay unemployment benefits, but severance paid as "wages in lieu of notice" (i.e., paid over a specific time period tied to your final notice period) is treated as wages and delays benefits dollar-for-dollar during that period. File your unemployment claim when you separate; TWC will determine the impact based on how the severance is structured.

Texas Severance — No State Tax, Federal WARN, 2026

By Severance Calculator Editorial · Updated May 12, 2026

Texas WARN: what applies

Texas has no state mini-WARN statute. Only federal WARN (29 U.S.C. ch. 23) applies — employers with 100 or more employees must give 60 days advance notice for mass layoffs affecting 50 or more employees at a single site.

How severance is taxed in Texas

Texas has no state income tax. Your severance is subject only to federal supplemental withholding (22%, or 37% on amounts above $1,000,000 cumulative for the year) and FICA. No state withholding applies.

Calculate your situation

Inputs default to Texas; adjust to your specifics.

Your situation

Role level

Years of tenure

Base salary ($)

State of employment

Age

Severance benchmarks

Typical benchmark

$24,519

7.5 weeks · methodology: benchmarks are derived from publicly reported severance norms across us corporate layoffs. weeks/year scale with role level; tenure <1 year gets a floor; cap at 52 weeks. these are negotiation reference points, not promises.

Band	Weeks	Gross
Typical	7.5	$24,519
Good	12.5	$40,865
Aggressive	20.0	$65,385

Tax breakdown (typical band)

Gross	$24,519
Federal supplemental	−$5,394
State supplemental	−$1,618
FICA — Social Security	−$1,520
FICA — Medicare	−$356
FICA — Additional Medicare	−$0
Net cash	$15,631

WARN Act

Not a group layoff

OWBPA review window

Individual exit (21-day review window) under the Older Workers Benefit Protection Act, plus 7-day revocation right.

Review window: 21 days · Revocation: 7 days after signing

COBRA cost

Monthly: $0

Annual: $0

Enter your employer-side monthly premium for an estimate.

Equity at termination

Forfeited unvested: $0

ISO exercise window post-termination: 90 days

ISO holders: you typically have 90 days post-termination to exercise vested ISOs before they convert to NSOs.

FAQ

Does Texas require severance pay?: No. Texas does not have a state-mandated severance statute, and there is no Texas mini-WARN. Severance is entirely employer-discretionary unless your employment contract or company policy requires it.
How is severance taxed in Texas?: Texas has no state income tax, so only federal taxes apply. The federal supplemental withholding rate is 22% on amounts under $1,000,000 cumulative for the year, 37% above. Plus FICA (Social Security 6.2% up to $176,100 wage base, Medicare 1.45% on all wages, plus 0.9% additional Medicare on wages above $200,000 single or $250,000 married filing jointly).
Does federal WARN apply to my Texas layoff?: Federal WARN applies if (a) your employer has 100 or more employees and (b) the layoff at your single site of employment affects 50 or more employees AND at least 33% of the workforce, OR affects 500 or more employees regardless of percentage. If federal WARN applies, you are entitled to 60 days advance notice or pay-in-lieu.
Can I file for unemployment in Texas while receiving severance?: Yes, but the timing matters. Texas Workforce Commission rules treat severance differently depending on whether it is a lump sum or paid in installments. Generally, lump-sum severance does not delay unemployment benefits, while installments paid as "wages in lieu of notice" may delay benefits dollar-for-dollar. Apply when you separate; TWC will determine the impact.
Are non-competes enforceable in Texas after a layoff?: Yes, but only if reasonable in time, geographic area, and scope of activity (Tex. Bus. & Com. Code § 15.50). Texas courts will enforce post-employment non-competes that are tied to legitimate business interests like trade secrets or customer goodwill, but unreasonable restraints are reformed or struck down. Severance is often used as consideration for a non-compete in Texas; you can negotiate for a narrower non-compete in exchange for signing the release.
Can I collect Texas unemployment while receiving severance?: Texas Workforce Commission rules: lump-sum severance generally does not delay unemployment benefits, but severance paid as "wages in lieu of notice" (i.e., paid over a specific time period tied to your final notice period) is treated as wages and delays benefits dollar-for-dollar during that period. File your unemployment claim when you separate; TWC will determine the impact based on how the severance is structured.

Glossary
WARN Act
Glossary
Mass layoff
Glossary
OWBPA
Scenario
Severance after a PIP
Scenario
H-1B layoff severance