Tax in Maine: a complete guide
Compared to some of its New England neighbors, Maine has relatively high income and sales taxes. Here is an overview of all state taxes in Maine covering the state’s income, sales, and retirement taxes.
At a glance, here’s a general overview of Maine’s taxes:
Income tax of up to 7.15 percent
Statewide sales tax of 5.5 percent
Maine is one of just 12 states to impose an estate tax
Maine income tax
Maine’s income taxes are progressive, meaning the amount you pay is relative to how much you earn.
All Maine income is taxed the same – so unlike federal income tax, capital gains and ordinary income are taxed together. In 2023, the Maine state income tax rates range from 5.80 percent to 7.15 percent.
What are the Maine state income tax brackets for 2023/2024?
|Taxable income (single income)||Taxable income (married couple)||Income tax rate|
|$0 to $24,500||$0 to $49,050||5.80 percent|
|$24,500 to $58,050||$49,050 to $116,100||6.75 percent|
|$58,050 or more||$116,100 or more||7.15 percent|
Due to Maine’s progressive tax system, how it applies to your salary is broken up into portions.
For example, imagine a single individual who earns a salary of $100,000 in the state of Maine, Maine’s state income taxes would apply to their salary like this:
The first $24,500 of their salary will be taxed at 5.8 percent, meaning they pay $1,421.
The chunk of their salary from $24,500 to $58,050 (a total of $33,550) will be taxed at 6.75 percent, meaning they pay $2,264.62.
And finally, the last part of their salary – from $58,050 to $100,000 (a total of $41,950) will be taxed at 7.15 percent, meaning they pay $2,999.42.
So, this person would pay a total of $6,685.04 in state income tax.
Income tax in Maine is relatively high, but the state does offer some favorable sales state tax rates.
Maine sales tax
Maine has a state sales tax of 5.5 percent and is one of only a few states to forbid cities and towns from imposing local sales taxes. In addition, some items are tax-exempt, including:
Grocery staples – including some meats, fruit, vegetables, and bread
Some feminine hygiene products
This couldn’t be more different from Maine’s neighboring state of New Hampshire, which imposes no state sales tax and zero state income tax.
In addition to state sales tax, Maine also has excise taxes on alcohol and cigarettes. All of these excise duties apply on top of the state sales tax. Here’s what you need to know:
|Maine wine tax||$0.60 per gallon||Wine vendors are responsible for paying a state excise tax of $0.60 per gallon, plus Federal excise taxes, for all wine sold in Maine.|
|Maine beer tax||$0.35 per gallon||Beer vendors are responsible for paying a state excise tax of $0.35 per gallon, plus Federal excise taxes, for all beer sold in Maine.|
|Maine liquor tax||0||"Sales of liquor are state-controlled in Maine.|
|This means liquor sales are only permitted in state alcohol stores (ABC stores)."|
|Maine cigarette tax||$2 per pack||In Maine, cigarettes are subject to a state excise tax of $2.00 per pack of 20.|
Maine property tax
Anyone who owns real estate in Maine must pay property taxes.
The amount you owe depends on the rate of property tax where you live and the market value of the property you own.
In Maine, property taxes are set by different municipalities across the state. Each of Maine’s 16 counties has a different property tax rate. This means that depending on where you live, you could pay anything from 1 to 1.65 percent in property taxes. The average rate of property tax in Maine is 1.09 percent.
Maine retirement tax
Maine has relatively high taxes for retirees – but with some notable exceptions. Retirement income from a retirement savings plan such as a 401(k) is taxed as income in Maine. You can be taxed anything from 5.8 to 7.15 percent on your retirement income. However, Social Security is exempt from any retirement tax, and other deductions are available.
Maine estate tax
Maine is one of only 12 states to charge an estate tax. However, there is a reasonably high threshold before you are liable to pay.
For 2023, you must pay tax if you inherit an estate worth more than $6.41 million. Once you pass the estate threshold of $6.41 million, there are three grades for the value of your estate, each with a different estate tax rate.
For the first $3 million after reaching the threshold of $6.41 million (any amount between $6.41 million and $9.41 million), the marginal rate is eight percent.
The marginal rate is ten percent for $3 million to $6 million over the threshold (from 9.41 to 12.41 million).
And for estates worth more than $6 million over the threshold (anything more than 12.41 million), the marginal rate is 12 percent.
Maine motor tax
Maine motorists have to pay an annual excise duty on their vehicles.
The amount you pay is determined by the age of your vehicle and the manufacturer’s suggested retail price (MSRP). The MSRP is multiplied by a mill rate applying to the age of your vehicle. The mill rates are as follows:
Year 1 .0240 mill rate
Year 2 .0175 mill rate
Year 3 .0135 mill rate
Year 4 .0100 mill rate
Year 5 .0065 mill rate
Year 6 .0040 mill rate
There are also excise duties on fuel. These are 30 cents per gallon of regular gasoline and 31.2 cents per gallon for diesel.
The bottom line
New England is known for a higher cost of living than some other US regions. Maine’s state taxes may appear higher than some of its neighbors, but relatively lower property prices relieve some of the property tax costs. Remember, taxes set at the state level will affect every household differently.
A financial advisor can help you handle all your tax queries and ensure you’re not paying more tax than needed. Find your financial advisor with Unbiased.
Senior Content Writer
Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.