2026 · Maine
Maine severance pay tax
Federal 22% plus Maine's 5.0% supplemental rate. But neither is your real tax rate. This works out what you owe.
Maine layoff at a glance
| State tax on severance | Flat 5.0% supplemental withholding |
| State income tax | Graduated, up to 7.5% |
| Unemployment weekly max | $623 for up to 26 weeks |
| Unemployment taxed by Maine? | Yes |
How Maine withholds on severance
Maine withholds a flat 5.0% on supplemental wages like severance. On top of that, the federal government withholds a flat 22% (37% over $1 million) and FICA, 6.2% Social Security up to the $184,500 wage base plus 1.45% Medicare.
Maine taxes income on a graduated scale topping out at 7.5%, so a large severance can be pushed into that top rate. If you also claim unemployment, Maine pays up to $623 a week for up to 26 weeks, and taxes it on the state return. That's the Maine layoff picture in one place, the severance tax here, the unemployment on its own Maine page.
Worked example: $40,000 severance in Maine
A single filer, $40,000 severance paid separately, with $60,000 of other 2026 income:
| Federal withholding (22%) | −$8,800 |
| FICA (Social Security + Medicare) | −$3,060 |
| Maine withholding | −$2,000 |
| Net check | $26,140 |
| What it costs in tax | $14,210 |
Under-withheld by about $350, set that aside now, you will owe it at filing. The withholding is a fixed rate; your actual tax is your marginal rate on the severance stacked on your other income.
Stacking Maine unemployment on top
Maine sizes your weekly check off your recent wages, up to $623 a week, mid-pack nationally (26th of 51). It adds $25 per dependent on top. Duration 15-26; base max $623, up to $1,090 with max dependents.
| Weekly benefit range | $108 - $623 |
| How the amount is set | Off your recent wages |
| Maximum duration | 26 weeks (15-26; base max $623, up to $1,090 with max dependents) |
| Waiting week | Yes, one unpaid week |
| Dependent allowance | $25 per dependent |
| Taxed by Maine | Yes |
Stacked together, that $40,000 severance nets about $26,140 and Maine's unemployment can add up to $16,198 over 26 weeks, about 11 months of a $4,000 budget before you need a paycheck. File through Maine Department of Labor, Bureau of Unemployment Compensation; nail down the exact figure in the runway calculator.
Questions about Maine severance tax
Is severance taxed higher in Maine?
No. It's withheld at a flat 22% federally and 5.0% by Maine, but it's taxed as ordinary income at your normal rates. The worked example on this page shows the gap in dollars: on a $40,000 severance, $8,800 of federal tax is withheld up front while the severance actually costs about $14,210 in tax for that filer. Whichever direction the gap runs, it settles up at filing, a refund if too much was taken, a bill to plan for if too little.
Does Maine tax my severance?
Yes, Maine taxes severance as wages. Maine withholds a flat 5.0% on supplemental wages like severance.
Will I get a refund or owe more?
It depends on your bracket. The flat 22% over-withholds for lower earners (refund) and under-withholds for those in the 32 to 37% brackets (set aside the difference). The crossover sits where your marginal rate passes 22%: below it, every severance dollar was over-withheld and comes back; above it, the flat rate quietly under-collects and the difference lands on your return as a balance due. For the $40,000 example on this page with $60,000 of other income, the calculator's verdict is printed under the worked example. Enter your numbers above to see which way it goes for you.
Your Maine layoff toolkit
- Maine unemployment benefits weekly amount and duration
- Runway calculator how long your money lasts
- Maine paycheck calculator take-home at your next job
- Maine 1099 tax if you go freelance
An estimate for the 2026 tax year. State supplemental figures from the verified dataset, last verified 2026-07-24. Nothing you enter is stored. Not tax advice.