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By Jason Heath, CFP on January 20, 2026
Estimated reading time: 4 minutes

By Jason Heath, CFP on January 20, 2026
Estimated reading time: 4 minutes

A CFP breaks down how severance and salary continuance are taxed, and explains when corporations do (and don’t) make sense for tax savings.

I was packaged out 6 months ago or so, got a big severance and continue to get a salary continuance for a while. My buddy said, “you should put that money in a corporation.” If I’m in the top marginal tax bracket personally, I could probably save money on investing in the corporation, couldn’t I?
—Geoffrey

So, this is a good question and one that comes up from time to time. It is important to understand how severance and salary continuance are taxed and how a corporation saves tax on income or investing.

When you lose your job and receive severance, it may be paid as a lump sum payment. It is generally a certain number of weeks of salary that increases based on factors like length of service, age, and seniority. Other factors can play a role, though.

When you receive a lump sum payment, the withholding tax is generally........

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