diff --git a/bytelatent/data/iterators/packing_iterator.py b/bytelatent/data/iterators/packing_iterator.py
index dc34120..87b0e84 100644
--- a/bytelatent/data/iterators/packing_iterator.py
+++ b/bytelatent/data/iterators/packing_iterator.py
@@ -119,12 +119,18 @@ def truncate_batch(
             y = np.full((batch.y.shape[0], max_length), pad_id, dtype=batch.y.dtype)
             y[:, : batch.y.shape[1]] = batch.y
             batch.y = y
-        if batch.mask is not None and batch.mask.shape[1] < max_length:
-            mask = np.full(
-                (batch.mask.shape[0], max_length), False, dtype=batch.mask.dtype
-            )
-            mask[:, : batch.mask.shape[1]] = batch.mask
-            batch.mask = mask
+        if batch.mask is None:
+            mask = batch.x != pad_id
+            # Only set the mask if its actually doing anything
+            if mask.sum() != batch.x.size:
+                batch.mask = mask
+        else:
+            if batch.mask.shape[1] < max_length:
+                mask = np.full(
+                    (batch.mask.shape[0], max_length), False, dtype=batch.mask.dtype
+                )
+                mask[:, : batch.mask.shape[1]] = batch.mask
+                batch.mask = mask
 
     assert batch.x.shape[1] <= max_length
     assert batch.y.shape[1] <= max_length
@@ -173,31 +179,46 @@ class PackingIterator(StatefulIterator[Batch, PackingIteratorState]):
         batch_size = self.packing_args.batch_size
         pad_id = self.packing_args.pad_id
         seq_len = self.packing_args.seq_len
+        stop_iteration = False
+        tokens: list[list[int]] = []
+        masks: list[list[bool]] = []
         while True:
-            tokens: list[list[int]] = []
-            masks: list[list[bool]] = []
-
-            for _ in range(self.packing_args.batch_size):
-                sequence = next(sequence_iter)
-                _tokens = sequence.tokens
-                _mask = sequence.mask
-                assert (
-                    sequence.patch_lengths is None
-                ), "patch_lengths should not be used in byte packing"
-                tokens.append(_tokens)
-                masks.append(_mask)
+            try:
+                for _ in range(self.packing_args.batch_size):
+                    sequence = next(sequence_iter)
+                    _tokens = sequence.tokens
+                    _mask = sequence.mask
+                    assert (
+                        sequence.patch_lengths is None
+                    ), "patch_lengths should not be used in byte packing"
+                    tokens.append(_tokens)
+                    masks.append(_mask)
+            except StopIteration:
+                # At this point, there will be no new sequences, so we need to stop
+                # after yielding the already accumulated data (one batch).
+                # In this case, either:
+                # 1. We have a complete batch, so things go as normal
+                # 2. We have an incomplete batch, but due to creating a right sized batch,
+                #   then filling the values in, this case is automatically handled.
+                stop_iteration = True
 
             x = np.full((batch_size, seq_len), fill_value=pad_id)
             y = np.full((batch_size, seq_len), fill_value=pad_id)
+            m = np.zeros((batch_size, seq_len), dtype=np.bool)
 
             for i, tok_seq in enumerate(tokens):
                 x[i, : len(tok_seq)] = tok_seq
                 y[i, : len(tok_seq) - 1] = tok_seq[1:]
-            batch = Batch(x=x, y=y)
+                m[i, : len(tok_seq)] = masks[i]
+            batch = Batch(x=x, y=y, mask=m)
             assert (
                 batch.mask is None or np.sum(x != pad_id) == batch.mask.sum()
             ), f"{np.sum(x != pad_id)} != {batch.mask.sum()}"
+            tokens = []
+            masks = []
             yield batch
+            if stop_iteration:
+                break
 
     def _create_iter_from_patch_lengths(self):
         sequence_iter = self.sequence_iterator.create_iter()
@@ -207,29 +228,36 @@ class PackingIterator(StatefulIterator[Batch, PackingIteratorState]):
         pad_to_max_length = self.packing_args.pad_to_max_length
         enable_byte_ngrams = self.packing_args.enable_byte_ngrams
         max_length = self.packing_args.max_length
+        assert max_length is not None
+        tokens: list[list[int]] = []
+        masks: list[list[bool]] = []
+        patch_lengths: list[list[int]] = []
+        stop_iteration = False
         while True:
-            tokens: list[list[int]] = []
-            masks: list[list[bool]] = []
-            patch_lengths: list[list[int]] = []
+            try:
+                for _ in range(self.packing_args.batch_size):
+                    sequence = next(sequence_iter)
+                    _tokens = sequence.tokens
+                    _mask = sequence.mask
+                    _patch_lengths = sequence.patch_lengths
+                    assert (
+                        _patch_lengths is not None
+                    ), "patch lengths are required for packing based on patches."
+                    # Reminder: seq_len is in terms of patches
+                    assert len(sequence.patch_lengths) == self.packing_args.seq_len
+                    last_patch_length = 0
+                    if _patch_lengths[0] > 1:
+                        last_patch_length = _patch_lengths[-1]
+                        _patch_lengths[0] -= 1
+                        _patch_lengths = [1] + _patch_lengths[:-1]
+                    tokens.append(_tokens[: len(_tokens) - last_patch_length])
+                    masks.append(_mask[: len(_mask) - last_patch_length])
+                    patch_lengths.append(_patch_lengths)
+            except StopIteration:
+                stop_iteration = True
 
-            for _ in range(self.packing_args.batch_size):
-                sequence = next(sequence_iter)
-                _tokens = sequence.tokens
-                _mask = sequence.mask
-                _patch_lengths = sequence.patch_lengths
-                assert (
-                    _patch_lengths is not None
-                ), "patch lengths are required for packing based on patches."
-                # Reminder: seq_len is in terms of patches
-                assert len(sequence.patch_lengths) == self.packing_args.seq_len
-                last_patch_length = 0
-                if _patch_lengths[0] > 1:
-                    last_patch_length = _patch_lengths[-1]
-                    _patch_lengths[0] -= 1
-                    _patch_lengths = [1] + _patch_lengths[:-1]
-                tokens.append(_tokens[: len(_tokens) - last_patch_length])
-                masks.append(_mask[: len(_mask) - last_patch_length])
-                patch_lengths.append(_patch_lengths)
+            if len(tokens) == 0 and stop_iteration:
+                break
 
             x_patch_lengths = np.array(patch_lengths)
             # pad batch to same length
@@ -257,6 +285,10 @@ class PackingIterator(StatefulIterator[Batch, PackingIteratorState]):
                 ngram_ids=ngram_ids,
                 mask=_merge_patch_seq_masks(batch_size, tok_seq_len, masks),
             )
+            tokens = []
+            masks = []
+            patch_lengths = []
+
             assert (
                 x_patch_lengths.sum() == x.size + batch_size
             ), f"{x_patch_lengths.sum()} != {x.size + batch_size}"
@@ -277,3 +309,5 @@ class PackingIterator(StatefulIterator[Batch, PackingIteratorState]):
                 enable_byte_ngrams=enable_byte_ngrams,
             )
             yield batch
+            if stop_iteration:
+                break
diff --git a/bytelatent/data/iterators/test_packing_iterator.py b/bytelatent/data/iterators/test_packing_iterator.py
new file mode 100644
index 0000000..ef296e4
--- /dev/null
+++ b/bytelatent/data/iterators/test_packing_iterator.py
@@ -0,0 +1,285 @@
+import numpy as np
+
+from bytelatent.data.data_types import BltSequence
+from bytelatent.data.iterators.abstract_iterator import StatefulIterator
+from bytelatent.data.iterators.packing_iterator import (
+    PackingArgs,
+    PackingIterator,
+    PackingMode,
+)
+
+
+class DummySequenceIterator(StatefulIterator):
+    def __init__(
+        self,
+        *,
+        seq_len: int,
+        n_seqs: int,
+        patch_lengths: list[int] | None = None,
+        pad_id: int = 0,
+    ):
+        self.seq_len = seq_len
+        self.n_seqs = n_seqs
+        self.patch_lengths = patch_lengths
+        self.pad_id = pad_id
+
+    def get_state(self):
+        raise NotImplementedError()
+
+    def create_iter(self):
+        for i in range(self.n_seqs):
+            if self.patch_lengths is None:
+                tokens = np.arange(
+                    i * self.seq_len + 1, (i + 1) * self.seq_len + 1
+                ).tolist()
+                mask = [True] * self.seq_len  # type: ignore
+                assert len(tokens) == self.seq_len
+            else:
+                n = sum(self.patch_lengths)
+                tokens = np.arange(i * n + 1, (i + 1) * n + 1).tolist()
+                assert len(tokens) == n
+                mask = [True] * n
+                assert len(mask) == len(tokens)
+            yield BltSequence(
+                tokens=tokens,
+                mask=mask,
+                patch_lengths=self.patch_lengths,
+            )
+
+
+def create_bytes_iter(*, seq_len: int, n_seqs: int, batch_size: int, pad_id: int):
+    sequence_iterator = DummySequenceIterator(seq_len=seq_len, n_seqs=n_seqs)
+    packing_iterator = PackingIterator(
+        sequence_iterator,
+        packing_args=PackingArgs(
+            batch_size=batch_size,
+            seq_len=seq_len,
+            pad_id=pad_id,
+            packing_mode=PackingMode.BYTES,
+            max_length=None,
+            pad_to_max_length=False,
+            enable_byte_ngrams=False,
+        ),
+    )
+    return packing_iterator.create_iter()
+
+
+def create_patches_iter(
+    *,
+    seq_len: int,
+    n_seqs: int,
+    batch_size: int,
+    pad_id: int,
+    patch_lengths: list[int] | None,
+    max_length: int,
+):
+    sequence_iterator = DummySequenceIterator(
+        # seq_len=number of bytes, which for blt/patches, is max_length since seq_len is
+        # in terms of number of patches
+        seq_len=max_length,
+        n_seqs=n_seqs,
+        patch_lengths=patch_lengths,
+    )
+    packing_iterator = PackingIterator(
+        sequence_iterator,
+        packing_args=PackingArgs(
+            batch_size=batch_size,
+            seq_len=seq_len,
+            pad_id=pad_id,
+            packing_mode=PackingMode.PATCHING,
+            max_length=max_length,
+            pad_to_max_length=True,
+            enable_byte_ngrams=False,
+        ),
+    )
+    return packing_iterator.create_iter()
+
+
+def test_last_batch_correctness_bytes():
+    seq_len = 1024
+    n_seqs = 10
+    batch_size = 4
+    pad_id = 0
+    iterator = create_bytes_iter(
+        seq_len=seq_len, n_seqs=n_seqs, batch_size=batch_size, pad_id=pad_id
+    )
+    batches = []
+    n_nonpad = 0
+    n_nonmask = 0
+    for b in iterator:
+        assert b.x.shape[0] == batch_size
+        assert b.x.shape[1] == seq_len
+        n_nonpad += (b.x != pad_id).sum()
+        if b.mask is None:
+            n_nonmask += b.x.size
+        else:
+            n_nonmask += b.mask.sum()
+        batches.append(b)
+    assert len(batches) == 3
+    assert n_nonpad == n_nonmask == seq_len * n_seqs
+    # The second half of the last batch should be all pads
+    assert batches[-1].mask[2:].sum() == 0
+
+
+def test_edgecase_batch_correctness_bytes():
+    seq_len = 1024
+    n_seqs = 10
+    batch_size = 12
+    pad_id = 0
+    iterator = create_bytes_iter(
+        seq_len=seq_len, n_seqs=n_seqs, batch_size=batch_size, pad_id=pad_id
+    )
+    batches = []
+    n_nonpad = 0
+    n_nonmask = 0
+    for b in iterator:
+        assert b.x.shape[0] == batch_size
+        assert b.x.shape[1] == seq_len
+        n_nonpad += (b.x != pad_id).sum()
+        if b.mask is None:
+            n_nonmask += b.x.size
+        else:
+            n_nonmask += b.mask.sum()
+        batches.append(b)
+    assert len(batches) == 1
+    assert n_nonpad == n_nonmask == seq_len * n_seqs
+    # The second half of the last batch should be all pads
+    assert batches[0].mask[10:].sum() == 0
+
+
+def test_exact_batch_correctness_bytes():
+    seq_len = 1024
+    n_seqs = 12
+    batch_size = 4
+    pad_id = 0
+    iterator = create_bytes_iter(
+        seq_len=seq_len, n_seqs=n_seqs, batch_size=batch_size, pad_id=pad_id
+    )
+    batches = []
+    n_nonpad = 0
+    n_nonmask = 0
+    for b in iterator:
+        assert b.x.shape[0] == batch_size
+        assert b.x.shape[1] == seq_len
+        n_nonpad += (b.x != pad_id).sum()
+        if b.mask is None:
+            n_nonmask += b.x.size
+        else:
+            n_nonmask += b.mask.sum()
+        batches.append(b)
+    assert len(batches) == 4
+    assert n_nonpad == n_nonmask == seq_len * n_seqs
+
+
+def test_exact_batch_correctness_patches():
+    # First patch length is forced to be 1
+    patch_lengths = [1, 255, 256, 256, 256]
+    # Recall: This is in terms of bytes
+    max_length = 1024
+    # Recall: This is in terms of patches
+    seq_len = 5
+    n_seqs = 12
+    batch_size = 4
+    pad_id = 0
+    iterator = create_patches_iter(
+        seq_len=seq_len,
+        n_seqs=n_seqs,
+        batch_size=batch_size,
+        pad_id=pad_id,
+        patch_lengths=patch_lengths,
+        max_length=max_length,
+    )
+    batches = []
+    n_nonpad = 0
+    n_nonmask = 0
+    for batch in iterator:
+        assert batch.x.shape[0] == batch_size
+        assert batch.x.shape[1] == max_length
+        n_nonpad += (batch.x != pad_id).sum()
+        if batch.mask is None:
+            n_nonmask += batch.x.size
+        else:
+            n_nonmask += batch.mask.sum()
+        batches.append(batch)
+
+    assert len(batches) == 3
+
+    # max_length - 1 is due to chopping off the last byte for
+    # having a y target
+    assert n_nonpad == n_nonmask == (max_length - 1) * n_seqs
+
+
+def test_short_batch_correctness_patches():
+    # First patch length is forced to be 1
+    # Total=48
+    patch_lengths = [1, 11, 12, 12, 12]
+    # Recall: This is in terms of bytes
+    max_length = 1024
+    # Recall: This is in terms of patches
+    seq_len = 5
+    n_seqs = 12
+    batch_size = 4
+    pad_id = 0
+    iterator = create_patches_iter(
+        seq_len=seq_len,
+        n_seqs=n_seqs,
+        batch_size=batch_size,
+        pad_id=pad_id,
+        patch_lengths=patch_lengths,
+        max_length=max_length,
+    )
+    batches = []
+    n_nonpad = 0
+    n_nonmask = 0
+    for batch in iterator:
+        assert batch.x.shape[0] == batch_size
+        assert batch.x.shape[1] == max_length
+        n_nonpad += (batch.x != pad_id).sum()
+        if batch.mask is None:
+            n_nonmask += batch.x.size
+        else:
+            n_nonmask += batch.mask.sum()
+        batches.append(batch)
+
+    assert len(batches) == 3
+
+    # We'll still always have one byte chopped off the end
+    assert n_nonpad == n_nonmask == ((sum(patch_lengths) - 1) * n_seqs)
+
+
+def test_long_batch_correctness_patches():
+    # First patch length is forced to be 1
+    # Total=48
+    patch_lengths = [1, 255, 256, 256, 1024]
+    # Recall: This is in terms of bytes
+    max_length = 1024
+    # Recall: This is in terms of patches
+    seq_len = 5
+    n_seqs = 12
+    batch_size = 4
+    pad_id = 0
+    iterator = create_patches_iter(
+        seq_len=seq_len,
+        n_seqs=n_seqs,
+        batch_size=batch_size,
+        pad_id=pad_id,
+        patch_lengths=patch_lengths,
+        max_length=max_length,
+    )
+    batches = []
+    n_nonpad = 0
+    n_nonmask = 0
+    for batch in iterator:
+        assert batch.x.shape[0] == batch_size
+        assert batch.x.shape[1] == max_length
+        n_nonpad += (batch.x != pad_id).sum()
+        if batch.mask is None:
+            n_nonmask += batch.x.size
+        else:
+            n_nonmask += batch.mask.sum()
+        batches.append(batch)
+
+    assert len(batches) == 3
+
+    # No chop here since the next byte is available
+    assert n_nonpad == n_nonmask == max_length * n_seqs