Maine Tax and CPA Services: State, County and City Taxes

Maine has a graduated income tax with three brackets, a deduction for pension income and a subtraction for Social Security, a 5.5 percent sales tax with a higher rate for restaurant meals and lodging, and a new paid family and medical leave program that began paying benefits in 2026. Local government runs mostly on town property tax. This page covers what residents, retirees, remote workers, business owners and employers need to know. We serve Maine clients remotely from our Naperville, Illinois office.

Individual income tax

Maine Revenue Services says it generally taxes individuals with Maine-source income, and the rates are graduated from 5.8 percent to 7.15 percent. The 2025 tax rate schedules for single filers and married persons filing separately are 5.8 percent below $26,800 of taxable income, 6.75 percent between $26,800 and $63,450, and 7.15 percent above that. For married couples filing jointly, the first break is $53,600, and head of household filers have breaks at $40,200 and $95,150.

For 2025 the personal exemption is $5,150, and the standard deduction base amounts are $15,000 for single or married filing separately, $22,500 for head of household and $30,000 for married filing jointly or a qualifying surviving spouse. Itemized deductions are limited to $36,300, except for medical expenses, and the standard deduction and itemized deduction phase down for Maine adjusted gross income above $100,000.

Retirement income receives specific treatment:

• Social Security: if included in federal adjusted gross income, the taxable amount of Social Security benefits and railroad retirement benefits is subtracted on the Maine return.
• Pension income deduction: Maine allows a deduction for pension income, and a 2025 law change, effective September 24, 2025, excludes distributions from an employee retirement plan received before age 55 unless they are part of a series of substantially equal periodic payments.

Maine also offers a Property Tax Fairness Credit and a Sales Tax Fairness Credit, claimed on Schedule PTFC/STFC. Remote workers and people moving into or out of the state should review part-year and nonresident rules; see our multi-state tax service.

Business taxes

Maine's corporate income tax is graduated, with rates from 3.5 percent on income up to $350,000 to 8.93 percent on income over $3.5 million. The tax generally does not apply to S corporations unless the corporation has federal taxable income at the corporate level. Maine publishes rules on corporate nexus (Rule 808) and on unitary business combined reports (Rule 810).

Partnerships and S corporations with Maine-source income must file Form 941P if they have any nonresident members. The entity may have to withhold income tax for nonresident members, obtain an exemption from withholding, or elect to file a composite return that reports all the Maine-source income of nonresident partners or shareholders. That is a practical issue for out-of-state investors in Maine real estate or small businesses; see S corporation taxes.

Sales and use tax

The Department's rate table shows a general sales and use tax rate of 5.5 percent. Prepared food is taxed at 8 percent, rentals of lodging at 9 percent and short-term auto rentals at 10 percent. Long-term auto rentals and use tax are 5.5 percent. Adult-use cannabis carries a separate rate. The service provider tax, previously 5 to 6 percent, appears as repealed in the table's 2026 column. Maine also lists specific taxable services, such as extended cable and satellite television, rental of video media and fabrication services. See our sales tax service and sales tax nexus.

Payroll in Maine

• Withholding and unemployment reporting: Maine Revenue Services administers all aspects of income tax withholding and processes the quarterly Form 941ME. It also processes the Unemployment Contributions Report (Form ME UC-1), while the Maine Department of Labor administers the unemployment insurance contributions once the quarterly report is filed. Form W-3ME is no longer required for tax years after 2023. See state income tax withholding.
• Paid Family and Medical Leave: contributions began in January 2025, and eligible workers have been able to apply for up to 12 weeks of paid leave in a benefit year for leave on or after May 1, 2026. Employers register on the Maine Paid Leave portal, report wage data each quarter, remit contributions unless they have an approved private plan, and give employees notice within 30 days of hire. Claims are administered by Aflac. See state paid family and medical leave.
• Unemployment insurance: see the Department of Labor for the current wage base and rate notice. See state unemployment insurance.

Towns, counties and property tax

Maine's local governments rely on property tax set by each municipality. Maine Revenue Services administers state taxes, and the Property Tax Fairness Credit and the real estate withholding rules for nonresident sellers sit alongside local assessments. Towns and cities from Portland to Bangor bill property owners directly, so a nonresident who owns a camp or seasonal home should expect a local tax bill as well as possible Maine income tax on rental income. Maine has no local income tax. See local payroll taxes by city and county and our pages for neighboring New Hampshire and Massachusetts.

How we can help

We prepare Maine resident, part-year and nonresident returns, work through the pension deduction and Social Security subtraction, advise pass-through entities with nonresident members, and set up withholding, unemployment and paid leave accounts. For a notice from Maine Revenue Services, see state tax notices and representation. Contact us to begin; this page is general information.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.