Maine Income Tax Calculator - SmartAsset (2024)

Taxes in Maine

Maine State Tax Quick Facts

• Income tax: 5.80% - 7.15%
• Sales tax: 5.50%
• Property tax: 1.09% average effective rate
• Gas tax: 30 cents per gallon of regular gasoline, 31.2 cents per gallon of diesel

Maine has cut income taxes multiple times in recent years. In 2011, lawmakers lowered the income tax rate from 8.5% to 7.95%. That was one of the largest tax cuts in the state’s history. For the 2016 tax year, the highest tax rate was lowered again to 7.15%, where it has remained through at least the 2021 tax year. The state’s top rate still ranks as one of the highest in the U.S. Maine’s statewide sales tax of 5.50% also ranks among the lowest in the country, especially because there are no county or city sales taxes anywhere in the state.

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Maine Income Taxes

The state income tax in Maine is based on just three brackets. Earners with incomes landing in the bottom bracket pay a rate of 5.80%. Meanwhile, top earners face a rate of 7.15%.

Maine’s tax system conforms to the federal tax system in most ways, which means taxable income and deductions for the two are very similar. In fact, Maine taxes are based on federal adjusted gross income (AGI), although there are some differences and items that you may need to add to or subtract from your total income before applying the tax rates above.

The most significant addition to Maine taxes is for income from municipal and state bonds outside of the state of Maine. Any income from, for example, a City of Boston municipal bond must be added back to your total income. Income from such bonds are exempted from federal taxes.

Items that can be subtracted from your income for the purposes of calculating Maine’s state income tax include Social Security benefits (if included in federal AGI), income from obligations of the U.S. government (such as savings bonds or U.S. Treasury bills) and up to $10,000 in eligible pension payments to you and your spouse (less Social Security payments).

Itemized deductions match federal itemized deductions, and can only be claimed if you claim itemized deductions on your federal tax return. If you claim the standard deduction federally, you must also do so on your Maine tax return. In 2022, the standard deduction in Maine is $12,950 for single filers and married persons filing separately and $25,900 for joint filers. Exemptions likewise match federal rules.

Maine Tax Credits

Maine has a number of tax credits that benefit taxpayers in certain situations. The Maine Property Tax Fairness Credit is available to low-income homeowners who paid property tax on a primary residence in the past year. The benefit for this credit for single filers is $750, depending on filing status and the number of exemptions claimed.

The Child Care Credit is a partially refundable credit for child care expenses. It is equal to 25% of regular expenses and 50% of “quality” expenses (which require a certificate from your childcare provider). The first $500 of this credit is refundable.

The Credit for Educational Opportunity is a partially refundable credit for graduates from a Maine college or university with degrees in science, technology, engineering or math, and who made college loan payments during the tax year. This is applicable to Maine residents and part-year residents only. The Maine Seed Capital Credit is available to investors in qualified Maine businesses. This credit is given through the Finance Authority of Maine.

Maine Capital Gains Tax

Maine taxes both long- and short-term capital gains at the full income tax rates described in the income tax section above. This means that income from capital gains can face a state rate of up to 7.15% in Maine.

Maine Sales Tax

Maine levies taxes on “tangible personal property,” which includes physical and digital products, as well as some services. The general sales tax rate is 5.50%. Since there are no local sales taxes, that is the highest rate you will pay anywhere in the state. Some goods are specifically exempt from taxation, most notably groceries, prescription drugs, prosthetic devices, diabetic supplies, crutches, wheelchairs and newspapers.

Taxable services are subject to a higher rate of 6%. Services that are taxed in Maine include: cable and satellite television service, rentals of videos or video equipment, rentals of furniture, rentals of audio or audio equipment, telecommunications services and certain types of support and training services (like alcoholism recovery centers).

Maine Property Tax

Property taxes in Maine are an important source of revenue for local governments and school districts. The state has an average effective property tax rate of 1.30%. That means that, on average, Mainers pay 1.09% of their home’s value in property taxes. As described above, low-income homeowners may be able to claim a tax credit to offset the cost of their property taxes.

If you’re considering purchasing a home in Maine, our Maine mortgage guide lays out the key information about getting a mortgage in the Pine Tree State. It offers details on rates and the various kinds of loans available.

Maine Estate Tax

For deaths in 2022, the estate tax in Maine applies to taxable estates with a value over $6 million. Estates above that threshold are taxed as follows: 8% on first $3 million above the threshold; 10% on the next $3 million; and 12% on all remaining value. That means any taxable estate with a value over $12 million will face the top marginal rate.

Maine Gas Tax

The state excise tax on gas in Maine is 30 cents per gallon of regular gasoline. Additional levies on fuel are collected for the Ground and Surface Waters Clean-up and Response Fund. Meanwhile, total taxes on diesel are 31.2 cents per gallon..

Maine Cigarette Tax

If you buy cigarettes in Maine, you’ll have to pay the state’s cigarette tax. It adds up to $2.00 per pack.

Maine Alcohol Tax

Maine is an alcoholic beverage control state, meaning the state’s Bureau of Alcoholic Beverages and Lottery Operations controls the wholesale of liquor and fortified wines within the state. Taxes are included within sale prices, which means those prices are higher than they otherwise would be. The state’s excise tax on liquor is $1.24 per gallon. The beer tax is 35 cents per gallon, and the wine tax is $0.60 per gallon.

• Maine has the lowest population density of any state east of the Mississippi.
• West Quoddy Head, Maine is the easternmost point in the 50 states, and, therefore, the closest to Europe.
• The largest cities in Maine are Portland, Lewiston and Bangor. The capital, Augusta, has fewer than 20,000 residents.