State-by-State Guide to Taxes on Retirees
Tool | November 2019

State-by-State Guide to Taxes on Retirees


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The Bottom Line
Flag of Maine

Mixed Tax Picture

The Pine Tree State, like the majority of states, exempts Social Security benefits from state income taxes. Plus, up to $10,000 per person of eligible pension income can be deducted.

Income above that threshold, though, will face stiff income taxes. Maine is one of a few states that do not allow cities and towns to impose their own local sales tax; only state sales tax of 5.5% is due.

State Sales Tax

State levy of 5.5%.

Income Tax Range

Low:5.8% (on taxable income less than $21,450 for single filers; less than $42,900 for joint filers)

High: 7.15% (on taxable income of $50,750 or more for single filers, $101,550 for joint filers)

Effective tax rate: 5.8% for single filers, 6.04% for joint filers.

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

Military pensions and Railroad Retirement benefits are fully exempt. In addition, up to $10,000 of other federally-taxed retirement income (including income from pensions, 401(k) plans and IRAs), minus Social Security and Railroad Retirement benefits, is exempt.

Property Taxes

In Maine, residents pay an average $1,424 in taxes per $100,000 of assessed home value.

Tax breaks for seniors: Maine residents of 65 years or older may receive a Property Tax Credit up to $1,200 if their total income for the 2018 year did not exceed $34,167 (single) or $44,167 (head of household, married filing jointly or qualified widow).

Vehicle Taxes

Sales tax is due. An annual excise tax is also levied. The rate depends on a car’s age and value (set by the original MSRP, or window sticker price). Example: The owner of a three-year-old car with an MSRP of $19,500 would pay an excise tax of $263.

Inheritance and Estate Taxes

Maine has an estate tax with an exemption of $5.7 million (in 2019). Tax rates range from 8% to 12%.