2026 · Massachusetts
Massachusetts severance pay tax
Federal 22% plus Massachusetts's 5.0% supplemental rate. But neither is your real tax rate. This works out what you owe.
Massachusetts layoff at a glance
| State tax on severance | Flat 5.0% supplemental withholding |
| State income tax | Flat 5.0% |
| Unemployment weekly max | $1,105 for up to 30 weeks |
| Unemployment taxed by Massachusetts? | Yes |
How Massachusetts withholds on severance
Massachusetts 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.
Massachusetts taxes income at a flat 5.0%, which is the rate that applies to severance whichever way it's withheld. If you also claim unemployment, Massachusetts pays up to $1,105 a week for up to 30 weeks, and taxes it on the state return. That's the Massachusetts layoff picture in one place, the severance tax here, the unemployment on its own Massachusetts page.
Worked example: $40,000 severance in Massachusetts
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 |
| Massachusetts withholding | −$2,000 |
| Net check | $26,140 |
| What it costs in tax | $13,210 |
Over-withheld by about $650, expect roughly that back as a refund at filing. The withholding is a fixed rate; your actual tax is your marginal rate on the severance stacked on your other income.
Stacking Massachusetts unemployment on top
Massachusetts sizes your weekly check off your recent wages, up to $1,105 a week, one of the more generous in the country (2th of 51). It adds $25 per dependent on top. Duration 26 standard, up to 30 in high-unemployment periods.
| Weekly benefit range | $60 - $1,105 |
| How the amount is set | Off your recent wages |
| Maximum duration | 30 weeks (26 standard, up to 30 in high-unemployment periods) |
| Waiting week | Yes, one unpaid week |
| Dependent allowance | $25 per dependent |
| Taxed by Massachusetts | Yes |
Stacked together, that $40,000 severance nets about $26,140 and Massachusetts's unemployment can add up to $33,150 over 30 weeks, about 15 months of a $4,000 budget before you need a paycheck. File through Massachusetts Department of Unemployment Assistance (DUA); nail down the exact figure in the runway calculator.
Questions about Massachusetts severance tax
Is severance taxed higher in Massachusetts?
No. It's withheld at a flat 22% federally and 5.0% by Massachusetts, 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 $13,210 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 Massachusetts tax my severance?
Yes, Massachusetts taxes severance as wages. Massachusetts 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 Massachusetts layoff toolkit
- Massachusetts unemployment benefits weekly amount and duration
- Runway calculator how long your money lasts
- Massachusetts paycheck calculator take-home at your next job
- Massachusetts 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.