What Is the Sales Tax in Maine and What Does It Cover?

Sales tax is a consumption tax applied to the sale of goods and services. Maine’s sales tax system impacts the final cost of many purchases and helps fund various state services. Understanding its rates and applications ensures compliance for consumers and businesses.

The General Sales Tax Rate

Maine imposes a statewide general sales tax rate of 5.5% on the retail sale of most tangible personal property. This rate applies uniformly across the entire state, meaning there are no additional local sales taxes levied by cities or counties. Items typically subject to this general rate include common retail goods such as clothing, electronics, and furniture.

The sales tax also applies to certain services and digital products, including items transferred electronically, such as software or streaming services. Businesses selling these items are responsible for collecting the 5.5% tax from their customers.

Specific Taxable Transactions

Beyond the general sales tax, Maine applies different rates to specific categories. Meals and prepared food are taxed at 8%. This rate applies to food prepared by a retailer for immediate consumption, whether consumed on the premises, as takeout, or provided through catering services.

Lodging rentals, including hotel rooms, rooming houses, and tourist or trailer camps, are subject to a 9% sales tax. This applies to short-term accommodations, generally those lasting less than 28 consecutive days. Exemptions exist for casual rentals of a single unit for less than 15 days in a calendar year, or for rentals of 28 days or more if the living quarters serve as a primary residence or are for educational or employment purposes.

Automobile rentals have varying tax rates depending on the rental period. Short-term automobile rentals (less than one year) are taxed at 10%. This applies to cars, pickup trucks, and vans under 26,000 pounds gross vehicle weight rented from businesses primarily engaged in automobile rentals. For long-term automobile rentals (one year or more), the standard 5.5% sales tax rate applies.

Telecommunications services are specifically taxed in Maine, including prepaid calling services and the transmission and distribution of electricity. Other enumerated services such as fabrication services, extended service contracts on vehicles, and the rental of video media and equipment are subject to sales tax. Most other services are generally not taxed unless explicitly listed in state law.

Common Exemptions

Maine’s sales tax law provides several common exemptions. Groceries for home consumption are generally exempt from sales tax. This exemption covers basic food items like fresh produce, dairy products, meats, breads, and canned or boxed foods. Prepared foods, soft drinks (unless they are primarily milk or juice based), and certain snacks like chips or candy are typically taxable.

Prescription drugs and certain medical devices are also exempt from sales tax. Residential utility services, such as the transmission and distribution of electricity, are considered taxable services. Other services not specifically enumerated as taxable are generally exempt from sales tax.

Sales made to specific exempt organizations also qualify for sales tax exemption. This includes purchases made by government entities and certain non-profit organizations, particularly those recognized as 501(c)(3) organizations by the Internal Revenue Service. As of January 1, 2025, a blanket exemption for 501(c)(3) non-profits became effective, provided the purchases are for mission-related purposes and the organization obtains an exemption certificate from Maine Revenue Services.

Understanding Use Tax

Use tax is a complementary tax to sales tax, designed to ensure fairness. It applies to tangible personal property and taxable services stored, used, or consumed in Maine when sales tax was not collected at the time of purchase. This frequently occurs with purchases made from out-of-state vendors, including online retailers. In such cases, the consumer becomes responsible for remitting the use tax directly to the state.

The use tax rate in Maine is generally the same as the sales tax rate, which is 5.5%. For individuals, use tax on single items costing $5,000 or less can be reported on their Maine personal income tax return. Businesses registered to collect sales tax typically report use tax on their regular sales tax returns. The purpose of the use tax is to prevent consumers from avoiding sales tax by purchasing goods outside of Maine, ensuring a level playing field for businesses.