Employment Law Questions? Ask an Employment Lawyer.
Your employer used 25% withholding rate to total payoff because that was a FINAL paycheck.
I assume that was a mistake made by the payroll person - and if so - you may ask to correct it.
However - otherwise - you are correct - withholding from regular wages - including the final paycheck should be according to W4 form.
On the other hand - that is withholding - not your actual tax liability - so when you will file your tax return - if your actual tax liability will be less than withheld amount - you will be claiming a refund - thus the money will be in your hands anyway.
But if larger withholding creates a financial hardship now - you definitely may communicate with your former employer and ask to correct that mistake.