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Arkansas · severance & unemployment

Severance pay in Arkansas

  • 3.9% Arkansas tax on your severance, plus 22% federal and 7.65% Social Security/Medicare.
  • Unemployment: up to $451 a week, for up to 16 weeks.
  • File your unemployment claim right away — it protects your claim start date.

If your Arkansas job just ended, the biggest immediate issues are usually how separation pay affects unemployment, how much of a severance check is merely withheld rather than finally taxed, and how quickly to file your first claim. Arkansas also has a relatively short regular unemployment duration: an eligible claimant may receive up to 12 weeks, subject to the claim's wage-based determination and other eligibility rules.

Estimate my take-home → See the first 72 hours ↓
The essentials

Arkansas at a glance

2026 Arkansas income-tax rates
0%, 2%, 3%, 3.4%, or 3.7%
Graduated rates on Arkansas taxable income; 3.7% is the top 2026 rate, not a flat rate on a severance check.
Arkansas withholding
2026 tables effective 01/01/2026
Employer uses Arkansas withholding tables and employee withholding information; withholding is not final tax liability.
Federal supplemental withholding
22%
Common federal withholding assumption for separately identified supplemental wages; this is withholding, not necessarily final federal tax.
Employee FICA assumption
7.65%
Generally 6.2% Social Security plus 1.45% Medicare; 2026 Social Security wage base is $184,500 and Medicare has no wage cap.
Arkansas unemployment maximum
$451per week
Maximum weekly benefit amount, not an expected payment for every claimant.
Maximum regular duration
Up to 12 weeks per claim
Duration is subject to the monetary determination and continuing eligibility.
Waiting week
First eligible week unpaid
You must still meet weekly requirements, but no payment is made for that week.
Filing timing
File promptly after unemployment or substantial hour reduction
Use Arkansas DWS EZARC; do not wait for a severance decision.
Weekly certification
Sunday–Saturday claim week
Report gross earnings and other relevant payments for the week to which they relate.
Work search
At least 5 qualifying activities per week
Unless excused; activities must be reported and may be audited.
Last verified
2026-08
Figures and rules were checked against official sources dated January–August 2026 where available.
Plain English

What severance means in Arkansas

Severance is generally treated as wage compensation for federal payroll purposes. It can be subject to federal income-tax withholding, Social Security, and Medicare taxes, and the IRS identifies severance payments as wages for these purposes.

The federal 22% figure is usually a withholding percentage, not your final federal tax rate. Arkansas uses graduated income-tax rates for 2026, ranging from 0% to a top rate of 3.7%. Final liability depends on filing status, deductions, credits, Arkansas residency, income earned in other states, total annual income, and whether the payment is a lump sum or continuation of salary. Check the pay stub and year-to-date totals rather than assuming withholding equals final tax.

See the math

A worked example

The assumptions
  • Arkansas resident
  • Single employee
  • Annual salary $62,400, or $1,200 per week
  • Employment ended through a layoff
  • Two weeks of severance paid as a separately identified lump sum
  • Gross severance equals 2 × $1,200 = $2,400
  • Payment treated as supplemental wages for this illustration
  • Federal withholding assumption: 22%
  • Employee FICA assumption: 7.65%
  • Arkansas state withholding assumption: $0 for this illustration
  • No benefit deductions, retirement contributions, insurance deductions, or other payroll adjustments
Estimated withholding
Gross severance$2,400
Federal (22%)-$528
FICA (7.65%)-$183.60
Arkansas state$0
Illustrative take-home $1,688.40

Illustrative payroll-withholding estimate - not final tax advice. The 22% and 7.65% figures are assumptions for this example, not a prediction of the worker's final tax bill.

Run your own numbers →
Benefits

Unemployment in Arkansas

01You generally may qualify for Arkansas unemployment if you are unemployed or have substantially reduced hours, are able and available to work, are legally authorized to work, meet the wage requirements, and lost work through no fault of your own. A layoff or reduction in hours is generally the clearest qualifying separation, but DWS makes the actual determination.

02Arkansas generally uses the first four of the last five completed calendar quarters as the base period. DWS issues a Monetary Determination showing the weekly benefit amount, maximum benefit amount, base period, and potential duration. The maximum weekly benefit is $451 and a claimant may qualify for up to 12 weeks per claim, but these are maximums, not promises. The first eligible week is unpaid as the waiting week. Severance, pay in lieu of notice, continuing salary payments, vacation pay, sick pay, holiday pay, and PTO may affect specific weeks and must be reported. Part-time work may allow partial benefits, but gross earnings must be reported for the Sunday–Saturday week in which the work was performed. At least five qualifying work-search activities must generally be completed and reported each week.

Move fast

Your first 72 hours

  1. 01
    Save the termination notice, severance agreement, final pay statement, PTO balance, benefits-end date, and pay-in-lieu-of-notice language.
    These documents determine how to describe payments to DWS and help identify payroll errors.
  2. 02
    File an Arkansas UI claim promptly through EZARC.
    Filing promptly protects the timing of your claim; you can report and clarify severance separately.
  3. 03
    Calendar the unpaid waiting week and weekly certifications through Launch or ArkLine.
    The first eligible week is unpaid, and later payments require continued certifications.
  4. 04
    Create a record of at least five qualifying work-search activities each week unless DWS excuses you.
    Arkansas requires the activities to be reported, and records may be audited.
  5. 05
    Ask payroll for a written breakdown of regular wages, severance, pay in lieu of notice, PTO, bonus, and salary continuation.
    The classification and allocation of payment can affect the UI weeks you must report.
  6. 06
    Check when employer health coverage ends and compare COBRA with Marketplace coverage.
    Loss of job-based coverage generally creates a Marketplace Special Enrollment Period with a 60-day application window.
  7. 07
    Keep the severance pay stub showing federal withholding, FICA, Arkansas withholding, and other deductions.
    Withholding is not final tax liability, and the year-to-date information is needed for accurate tax planning.
Common questions

Arkansas severance FAQ

Do I wait until my severance is paid before filing?

No. If you are unemployed or your hours have been substantially reduced, file promptly. Report severance or other separation pay when answering the weekly questions and ask DWS how it affects the relevant weeks.

Can Arkansas severance block unemployment for more than one week?

It may. Arkansas materials state that separation payments can disqualify benefits for a number of weeks corresponding to the wages represented by the payment. The agreement's wording, payment amount, and allocation matter.

Does unused PTO count as unemployment income?

It can affect a claim week. DWS instructs claimants to report vacation pay and PTO for the week to which the payment relates, even if the employer pays it at another time.

Is the $451 Arkansas unemployment amount what I should expect?

No. $451 is the state's highest weekly benefit amount. Your actual weekly amount depends on covered wages in the applicable base period and appears on the Monetary Determination.

How many Arkansas unemployment weeks are available?

A claimant may qualify for up to 12 weeks per claim, subject to the wage-based determination and continuing eligibility. The first eligible week is unpaid as the waiting week.

What if I worked part-time after the layoff?

You may still qualify for partial benefits, but report gross earnings for work performed during the Sunday–Saturday week being claimed. Do not report only the amount deposited after deductions.

What if I miss a weekly certification or work-search record?

Payment can be delayed or denied for that week, and inaccurate reporting can create an overpayment or fraud issue. Keep records and contact the Arkansas UI Hotline at 1-844-908-2178 if you are unsure how to correct a certification.

Sources & verification (9)

Figures are payroll-withholding and benefit-maximum estimates verified 2026-08, not final tax or an eligibility decision. Rules, rates and benefit amounts change — confirm your situation with Arkansas's official agency. NextClara is not a law firm, tax preparer, employer, or government agency, and gives educational estimates only.