Is Severance Pay Taxable?

Unfortunately, yes. That lump sum you receive is subject to taxes as it is

considered income. A couple of years ago, the Supreme Court ruled that it is
taxable in spite of the fact that employees receive it after service for a company
has been completed. The gap pay is responsible for payroll tax, Social Security
tax, and Medicare tax. The amount that you’re taxed, of course, depends on how
much you receive.

Now, before you run out and spend this money on that trip to Europe you’ve been
wanting to take, sit down and draw up a budget. Figure out how long you can
survive on this if you don’t line up a new job right away. (While you’re at it, it’s
worth looking into when and if you’ll eligible for unemployment—it can be a lot of
paperwork to fill out.) And remember, a week of pay might not be a lot, but it’s
still (a little) better than being shown the door with nothing more than a crate full
of your office items.

https://www.themuse.com/advice/a-newly-unemployed-persons-guide-to-severance-pay