Military Severance Pay

Military severance pay is paid by the United States Military after an eligible service member is involuntarily discharged. Military severance pay effectively severs all ties with the military and ends all other forms of compensation include pensions and medical benefits. Also referred to as involuntary separation pay, military severance pay may be given as either full pay or half pay and is calculated based on the rank and number of years of service of an individual. According to the Department of Defense ("DOD"), in order to be eligible for full pay, a military member must be separated involuntarily, be fully capable of continuing duty and must have their prior service qualify as "Honorable." An example of full pay severance is a military member who is separated because the military decided to reduce the size of its force. Service members qualify for half pay if they are involuntarily separated with "Honorable" or "General" service, and the reason for the separation is not because of their own request; must not be during their initial term of enlistment; must not be because of a court-martial sentence; must not be due to sub-par performance and must not be because an officer failed to receive a promotion twice and declines a continuation of active duty.

Fast Facts

  • Taken and a lump sum, military severance pay is taxed by the government at the highest rate.
  • Soldiers who have certain prior existing conditions may not qualify for military severance pay.

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