2026 · Minnesota
Minnesota severance pay tax
Federal 22% plus Minnesota's 6.3% supplemental rate. But neither is your real tax rate. This works out what you owe.
Minnesota layoff at a glance
| State tax on severance | Flat 6.3% supplemental withholding |
| State income tax | Graduated, up to 9.8% |
| Unemployment weekly max | $948 for up to 26 weeks |
| Unemployment taxed by Minnesota? | Yes |
How Minnesota withholds on severance
Minnesota withholds a flat 6.3% 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.
Minnesota taxes income on a graduated scale topping out at 9.8%, so a large severance can be pushed into that top rate. If you also claim unemployment, Minnesota pays up to $948 a week for up to 26 weeks, and taxes it on the state return. That's the Minnesota layoff picture in one place, the severance tax here, the unemployment on its own Minnesota page.
Worked example: $40,000 severance in Minnesota
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 |
| Minnesota withholding | −$2,500 |
| Net check | $25,640 |
| What it costs in tax | $13,930 |
Over-withheld by about $430, 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 Minnesota unemployment on top
Minnesota sizes your weekly check off your highest-earning quarter, up to $948 a week, one of the more generous in the country (3th of 51). There is no separate dependent add-on. Duration 9-26.
| Weekly benefit range | $37 - $948 |
| How the amount is set | Off your highest-earning quarter |
| Maximum duration | 26 weeks (9-26) |
| Waiting week | Yes, one unpaid week |
| Dependent allowance | None |
| Taxed by Minnesota | Yes |
Stacked together, that $40,000 severance nets about $25,640 and Minnesota's unemployment can add up to $24,648 over 26 weeks, about 13 months of a $4,000 budget before you need a paycheck. File through Minnesota DEED / Unemployment Insurance; nail down the exact figure in the runway calculator.
Questions about Minnesota severance tax
Is severance taxed higher in Minnesota?
No. It's withheld at a flat 22% federally and 6.3% by Minnesota, 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 $13,930 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 Minnesota tax my severance?
Yes, Minnesota taxes severance as wages. Minnesota withholds a flat 6.3% 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 Minnesota layoff toolkit
- Minnesota unemployment benefits weekly amount and duration
- Runway calculator how long your money lasts
- Minnesota paycheck calculator take-home at your next job
- Minnesota 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.