Maine’s car sales tax is 5.5% of the sale price, and it applies to every retail vehicle purchase in the state, new or used, dealer or private seller.1Maine State Legislature. Maine Code Title 36 Section 1811 – Sales Tax If you buy out of state and bring the vehicle home, you owe the same 5.5% as a use tax instead.2Maine State Legislature. Maine Code Title 36 Section 1861 – Imposition The rate has been 5.5% since October 1, 2019, and it covers passenger cars, trucks, motorcycles, and other motor vehicles.
What Counts as the Sale Price
The 5.5% is applied to what Maine calls the “sale price,” defined broadly as the total consideration the buyer gives the seller, valued in money.3Maine State Legislature. Maine Code Title 36 Section 1752 – Definitions That’s cash, credits, and any loan balance you assume from the seller. It is not just the number written on the check.
Trade-Ins Lower Your Tax
When you trade a vehicle in on another vehicle, you pay tax only on the difference. Buy a $30,000 car, hand over a trade worth $8,000, and the 5.5% applies to $22,000. The traded item has to be in the same category as the purchase, and dealer-to-dealer inventory swaps don’t qualify.4Maine State Legislature. Maine Code Title 36 Section 1765 – Trade-In Credit
Dealer Discounts vs. Manufacturer Rebates
A dealer discount comes off the price before tax, so you’re taxed on the reduced number. Manufacturer rebates split two ways. If you assign the rebate to the dealer at closing so it’s applied against the price, Maine treats it like a discount and it lowers the taxable amount, because the definition of sale price excludes “discounts allowed and taken on sales.”3Maine State Legislature. Maine Code Title 36 Section 1752 – Definitions A rebate that the manufacturer mails to you later does not reduce the sale price, because the dealer received full payment.
Private Sales
In a private sale, the taxable amount is generally what you actually paid, including any loan balance you assumed. If the price on the bill of sale looks unreasonably low and nothing backs it up, Maine Revenue Services can substitute the vehicle’s fair market value.5Maine Revenue Services. Instructional Bulletin No. 42 – Registration of Vehicles – Taxable/Exempt Keep a properly completed bill of sale so you can support the number.
Leases Work Differently
For a long-term vehicle lease (one year or more), Maine calculates tax on the total of all monthly payments over the lease term, plus any trade-in equity and any cash down payment. The full 5.5% on that total is due in the month the lease begins, not spread across each payment.6Maine Revenue Services. Notice to Lessors of Tangible Personal Property That is a substantial upfront cost, and lessees are often surprised by it.
If you decide to buy the vehicle at lease-end, the buyout is a separate sale, and the lessor collects sales tax on the option price.7Maine Revenue Services. Lease and Rental Transactions Effectively, you pay tax twice on the same car if you lease and then buy, so lease-to-own is more expensive than financing outright.
Buying Out of State
If you buy a vehicle in another state and bring it into Maine, the 5.5% use tax applies.2Maine State Legislature. Maine Code Title 36 Section 1861 – Imposition You get a dollar-for-dollar credit for any sales or use tax already paid to the other state. Pay 6% in Massachusetts, and you owe Maine nothing more. Pay 4% somewhere else, and you owe Maine the 1.5% difference.8Maine State Legislature. Maine Code Title 36 Section 1862 – Sales or Use Tax Paid to Another Jurisdiction
New Hampshire has no sales tax, so the credit there is zero. Crossing the border to shop does not save you the Maine tax; you still pay the full 5.5% when you register.
Who Collects the Tax and When You Pay
How you pay depends on the seller.
Licensed Maine dealers are required to collect the 5.5% at the time of sale and send it to the state. A dealer cannot let you skip it and settle up at registration, and if the dealer fails to collect, the dealer is on the hook for the tax.5Maine Revenue Services. Instructional Bulletin No. 42 – Registration of Vehicles – Taxable/Exempt
In a private sale, you pay the use tax yourself when you register the vehicle through the Secretary of State’s office. Bring a completed Use Tax Certificate (Form STMV6U) and a properly completed bill of sale. Payment is a prerequisite to registration, so you cannot register or legally operate the vehicle until the tax is paid. If you’re not planning to register (rare, but it happens), the use tax is still owed and can be sent to Maine Revenue Services on the Individual Use Tax Form.5Maine Revenue Services. Instructional Bulletin No. 42 – Registration of Vehicles – Taxable/Exempt
Exemptions
A genuine gift of a vehicle is not taxable, because there is no sale. Parent to child, no strings attached, no tax. The moment the recipient pays anything or assumes the seller’s loan balance, it stops being a gift and becomes a taxable transfer on whatever was paid or assumed.5Maine Revenue Services. Instructional Bulletin No. 42 – Registration of Vehicles – Taxable/Exempt “I’ll give you the car if you take over the payments” is not a gift to Maine.
Sales to the State of Maine, its political subdivisions, and the federal government are exempt, along with sales to incorporated agencies wholly owned by those governments.9Maine Legislature. Maine Code Title 36 Section 1760 – Exemptions
Penalties for Paying Late
If sales or use tax on a vehicle goes unpaid past its due date, Maine charges 1% of the unpaid tax per month (or partial month) it remains outstanding, up to 25%.10Maine State Legislature. Maine Code Title 36 Section 187-B – Penalties Ignore a formal assessment, exhaust your appeals, and then fail to pay within 10 days of a demand notice, and a separate 25% penalty stacks on top. Interest runs on the unpaid tax as well, independent of the penalties. Because tax has to be paid before registration in most cases, the penalty window mostly matters in private sales where the buyer sits on the paperwork.
One Thing the 5.5% Does Not Cover
The sales or use tax is not the only tax on a Maine vehicle. Every registered vehicle also owes an annual municipal excise tax, paid to the town where it’s registered, calculated on the vehicle’s original MSRP with rates that drop each year as the vehicle ages. That is a separate obligation from the 5.5% and is collected at registration alongside it, so don’t be surprised when the total bill at the town office is larger than the sales tax alone.