Yes, Maine is a high-tax state. By the most common national measure, Maine ranks fifth in the country for combined state and local tax burden, with residents paying about 10.64% of their personal income to state and local taxes.1WalletHub. Tax Burden by State in 2026 The weight comes from a progressive income tax that reaches 7.15%, property taxes set and collected by individual towns, and full state taxation of Social Security benefits. A moderate 5.5% sales tax does not do much to offset any of it.
Where Maine Sits Nationally
Measured as a share of personal income, the five heaviest state and local tax burdens in the country are Hawaii at 13.92%, New York at 13.56%, Vermont at 11.53%, California at 11.00%, and Maine at 10.64%. At the other end, Alaska collects 4.93%, Wyoming 5.79%, and New Hampshire 5.94% — less than half of what Maine takes relative to income.1WalletHub. Tax Burden by State in 2026
That New Hampshire comparison comes up constantly for people living near the border, because New Hampshire has no income tax and no general sales tax. The tradeoff is that New Hampshire lacks Maine’s property tax relief programs and retirement deductions, so whether crossing the line actually saves you money depends on your situation.
Income Tax: A Moderate Top Rate That Hits Early
Maine applies three progressive income tax rates — 5.8%, 6.75%, and 7.15% — with brackets adjusted each year for inflation. For the 2026 tax year, a single filer pays 5.8% on income up to $27,400, 6.75% up to $64,850, and 7.15% above that. For head of household, the thresholds are $41,100 and $97,300. For married couples filing jointly, they’re $54,850 and $129,750.2Maine State Legislature. Maine Revised Statutes Title 36 – 5111 Tax Imposed
The 7.15% top rate looks moderate next to California (13.3%) or New York (10.9%). What makes it feel heavier is where it kicks in. A single filer earning $65,000 is already paying the top marginal rate. In many other states, the top bracket doesn’t open until income reaches six figures. The rate is middling; the threshold is low.
Maine starts with your federal adjusted gross income and then applies its own modifications and deductions to reach your Maine taxable income.3Maine State Legislature. Maine Code Title 36 Section 5121 – Maine Taxable Income
Property Tax: Set by Your Town
Property taxes in Maine are assessed and collected by individual municipalities, not by the state. Each town sets its own mil rate based on local budgets for schools, roads, and emergency services. A mil rate of 20 means $20 for every $1,000 of assessed value. Crossing a municipal line can change your bill significantly.
The state’s effective property tax rate runs about 1.10%, which puts Maine in the upper half of states nationally. Heavy reliance on property tax to fund local government and public schools is the reason. Towns reassess periodically, so a rising housing market can push your bill up even if the mil rate doesn’t move.
The Relief That Softens the Burden
Several programs cut into the headline numbers if you qualify.
Homestead Exemption
If you’ve owned and occupied a Maine home as your primary residence for at least 12 months, $25,000 comes off the taxable value. On a $250,000 home in a town with a 20-mil rate, that’s about $500 a year. You apply through your local assessor’s office, and the exemption stays in place as long as the home remains your primary residence.4Maine Legislature. Maine Code Title 36 Section 683 – Exemption of Homesteads
Property Tax Fairness Credit
This refundable income tax credit targets residents whose property tax or rent eats a disproportionate share of their income. Your Maine adjusted gross income has to be $40,000 or less. The credit equals 40% of the amount by which your property taxes (or 25% of your rent) exceed 10% of your income, capped at $300 if you’re under 70 or $400 if you or your spouse is 70 or older. Renters qualify too, which is unusual. Government-subsidized rent that caps housing costs at a percentage of income generally doesn’t count.5Maine Legislature. Maine Code Title 36 Section 5219-II – Property Tax Fairness Credit
Pension Income Deduction
Maine fully taxes Social Security benefits at the state level, which catches a lot of retirees off guard when they move from a state that exempts them. There’s a pension income deduction of up to $30,000 per person for distributions from employer pensions, 401(k)s, IRAs (including Roth and SIMPLE), and government plans. The catch is that the $30,000 cap is reduced dollar-for-dollar by Social Security and railroad retirement benefits you receive, whether taxable or not. If your Social Security benefits exceed $30,000, you get no pension deduction at all.6Maine Revenue Services. Individual Income Tax FAQ
Military retirement pay is the exception. Benefits received under a military retirement plan, including survivor benefits, are completely exempt from Maine income tax with no cap and no Social Security offset.6Maine Revenue Services. Individual Income Tax FAQ
Sales and Excise Taxes
The general sales tax is 5.5% on most tangible goods and taxable services. Maine prohibits local add-on sales taxes, so the rate is the same everywhere in the state. Grocery staples are exempt; clothing and footwear are fully taxable.7Maine Revenue Services. Sales and Use Tax Rates and Due Dates
Several categories carry higher rates. Prepared food is 8%, lodging rentals 9%, and short-term car rentals 10%. These elevated rates capture a share of tourism spending that would otherwise fall on residents.7Maine Revenue Services. Sales and Use Tax Rates and Due Dates
Every vehicle registered in Maine owes an annual municipal excise tax based on the manufacturer’s suggested retail price and the vehicle’s age. The rate starts at 0.0240 of MSRP in year one and falls to 0.0040 by year six and beyond. On a vehicle with a $40,000 MSRP, that works out to $960 the first year, dropping to $160 by year six. It’s due before you can register the vehicle, on top of registration fees.8Maine Revenue Services. Excise Tax9Maine Legislature. Maine Code Title 36 Section 1482 – Excise Tax
Who Feels It Most
The honest answer is that Maine is unambiguously a high-tax state, but the gap between Maine and the national average narrows or widens depending on who you are.
Middle-income earners feel the income tax most, because the top 7.15% rate reaches them well before it would in most other states. Retirees drawing Social Security feel it harder than they expect, since the state taxes those benefits fully and offsets the pension deduction against them. Homeowners can claw some back through the homestead exemption, and lower-income households through the fairness credit.
High earners run into a different problem at the federal level. The federal state and local tax (SALT) deduction, which lets itemizers write off state income and local property taxes, is capped at $40,400 for most filers in 2026 ($20,200 for married filing separately). The cap phases down once modified adjusted gross income passes $505,000, dropping 30 cents per dollar above that line, with a floor of $10,000. A Maine homeowner paying $6,000 in property tax and $5,000 in state income tax deducts the full $11,000. A household paying $15,000 in property tax and $30,000 in state income tax is capped at $40,400 of the $45,000 total. Before the cap existed, high-tax-state residents could deduct the whole amount, which effectively lowered their federal tax to offset part of the state hit. The cap takes that cushion away and makes Maine’s rates bite harder at the top.