Taxes in Maine
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Most taxes in Maine are higher than the national average, including property tax, income tax, and estate tax. However, Maine is one of the few states that don’t allow local municipalities to impose a local sales tax—only a state-wide tax of 5.50% is levied.
Below, we explain various state taxes affecting retirement income and your ability to live affordably in Maine, such as sales tax, retirement tax, and property taxes. We’ve also provided details about tax credits, exemptions, tax relief programs, and retirement-related tax breaks.
For information regarding taxes in other states, see Retirement Taxes by State.
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Maine Tax Rates
|State Sales Tax||5.50%|
|Avg State/Local Sales Tax||0%|
|Gas Tax||$0.30 per gallon|
|Diesel Tax||$0.31 per gallon|
|Cigarette Tax||$2.00 per pack|
|Income Tax||7.15% maximum|
|Effective Tax Rate:||5.13%|
|Social Security Tax||None|
|Medical/Dental Deduction:||Federal Amount|
|Federal Income Tax Deduction:||None|
Maine State Taxes Explained
Maine Sales Tax
Maine’s state sales tax is 5.50% across all areas of the state. Municipalities do not impose local sales taxes. Prescription drugs and “grocery staples” are exempt, but clothing and motor vehicles incur a fee.
Maine Income Taxes
Maine is one of several states with a graduated income tax rate. For 2023, the minimum 5.8% rate applies to taxable income less than $24,500 (single filers) and less than $49,050 (joint filers). Taxable income over $58,050 for single filers and over $116,100 for joint filers will incur the maximum 7.25% rate.
Maine Property Taxes
Maine’s effective average property tax is 1.36%, or $2,585 on a $190,400 home. The Property Tax Fairness Credit gives a property tax credit to Maine homeowners and renters of up to $1,200. This credit is reduced to $750 for those under the age of 65. Income limits to qualify for the Property Tax Fairness Credit range from $42,00 to $68,000 for the tax year 2021 and are adjusted annually.
Maine also offers Homestead and Veteran’s Exemption programs to reduce property taxes for those who qualify. Veterans who served during a recognized war, are at least 62 years old and are classified as 100% disabled are entitled to a $6,000 exemption. Paraplegic veterans who received a federal grant to adapt their housing may receive a $50,000 exemption. See Maine Property Tax Exemptions for details about these and other tax relief programs.
Maine Retirement Taxes
Military pensions and Social Security benefits are not taxed in Maine. For 2023, up to $30,000 of other retirement income from pensions, 401(k) plans and IRAs are exempt, but taxpayers must subtract Social Security benefits. The exemption will increase to $35,000 in 2024 and thereafter. There is no federal income tax deduction.
Maine Estate Taxes
Maine has no inheritance tax. The state taxes estates at varying rates from year to year, ranging from 8% to 12%, with a $60.1 million exemption in 2022. A taxable estate is the sum of:
- Federal taxable amount plus taxable gifts made over one year ending on the date of the decedent’s death.
- Maine elective property value. If the decedent dies before January 1, 2016, this amount is decreased by any Maine qualified terminable interest property (QTIP) property.
See Maine’s estate tax documentation for details.