What Are the Different Tax Rates in Maine?

Maine’s tax system generates revenue for public services and infrastructure. It includes individual income tax, sales tax, property tax, and other specialized taxes, funding education, healthcare, and public safety.

Individual Income Tax Rates in Maine

Maine employs a progressive individual income tax system, meaning higher earners pay a larger percentage of their income in taxes. The state’s graduated tax structure features several income thresholds, each with a corresponding marginal tax rate. For instance, the rates currently range from 5.80% to 7.15%.

The specific income brackets and their applicable rates vary based on filing status, such as single, married filing jointly, or head of household. Taxable income in Maine generally refers to an individual’s adjusted gross income after certain deductions and exemptions have been applied.

To determine taxable income, Maine offers a standard deduction, a fixed dollar amount taxpayers subtract from income. Personal exemptions are also available, further reducing income subject to tax. These are fundamental in calculating final taxable income.

Sales Tax in Maine

Maine imposes a statewide sales tax on the sale of tangible personal property and certain services. The general sales tax rate is 5.50%. This rate applies uniformly across the state, as Maine does not allow for additional local sales taxes by municipalities or counties.

The sales tax primarily applies to physical goods and some digital products. Certain services are also subject to the sales tax, often at a slightly higher rate, such as 6% for taxable services. Common categories include retail purchases, restaurant meals, and various repair services.

Many essential goods and services are exempt from Maine sales tax. Notable exemptions include most food products purchased for home consumption, prescription medications, and prosthetic devices. Other exempt items include diabetic supplies, crutches, and wheelchairs.

Property Tax in Maine

Property taxes in Maine are assessed and collected locally by municipalities. Rates differ significantly between towns and cities, allowing communities to fund specific needs like schools, local infrastructure, and public safety.

The amount of property tax owed is determined by applying a mill rate to the assessed value of real property. A mill rate represents the amount of tax payable per $1,000 of a property’s assessed value. For instance, a mill rate of 10 means that for every $1,000 of assessed value, $10 in tax is due. Property values are assessed by municipal assessors to reflect a portion of the property’s market value, serving as the tax calculation base.

Maine offers statewide property tax relief programs. The Homestead Exemption provides a reduction in the assessed value of a primary residence, lowering the taxable amount for eligible homeowners. The Property Tax Fairness Credit offers a refundable credit against state income tax for a portion of property taxes paid or rent paid.

Other Key Maine Taxes

The corporate income tax applies to businesses operating within the state, with progressive rates ranging from 3.50% to 8.93% depending on the corporation’s income.

The Meals and Lodging Tax is imposed on prepared food, restaurant meals, and short-term lodging, such as hotel stays. The current rate for this tax is 9%. This tax is collected by businesses and remitted to the state.

Fuel taxes have specific per-gallon rates for gasoline and diesel fuel. The gasoline tax rate is 31.4 cents per gallon, and the diesel fuel tax rate is 32.7 cents per gallon.

Maine also imposes an estate tax, which applies to the value of a deceased individual’s estate that exceeds a certain threshold. An excise tax on vehicles is an annual tax paid to municipalities based on the vehicle’s age and its manufacturer’s suggested retail price (MSRP).