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Given a set of n non-overlapping geometric objects, can we separate a constant fraction of them using straight-line cuts that extend from edge to edge? In 1996, Urrutia posed this question for compact convex objects. Pach and Tardos later refuted it for general line segments by constructing a family where any separable subfamily has size at most O (n^{log₃ 2}). However, for axis-parallel rectangles, they provided positive evidence, showing that an Ω(1/log n)-fraction can be separated. This problem naturally arises in geometric approximation algorithms. In particular, when restricting cuts to only orthogonal straight lines, known as a guillotine cut sequence, any bound on the separability ratio directly translates into a clean and simple dynamic programming for computing a maximum independent set of geometric objects. This paper focuses on the case when the objects are squares. For squares of arbitrary sizes, an Ω(1)-fraction can be separated (Abed et al., APPROX 2015), recently improved to 1/40 (and 1/160 ≈ 0.62% for the weighted case) (Khan and Pittu, APPROX 2020). We further improve this bound, showing that a 9/256 ≈ 3.51% can be separated for the weighted case. This result significantly narrows the possible range for squares to [3.51%, 50%]. The key to our improvement is a refined analysis of the existing framework.