State-by-State Guide to Taxes on Retirees
Tool | December 2021

Maine State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.


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The Bottom Line
Flag of Maine

Not Tax-Friendly

When it comes to taxes, retirees get more bad news than good news in Maine. Let's start with property taxes, where the median annual tax rate per $100,000 of home value is more than $200 above the national average.

The Pine Tree State, like the majority of states, exempts Social Security benefits from state income taxes. Plus, up to $25,000 per person of eligible pension income can be deducted (more after 2022). However, income above that threshold faces 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 the state sales tax of 5.5% is due. That's good news. But Maine also has an estate tax. That's more bad news.

Income Tax Range

Low: 5.8% (on taxable income less than $22,450 for single filers; less than $44,950 for joint filers)

High: 7.15% (on taxable income of $53,150 or more for single filers; $106,350 for joint filers)

For 2022, the 5.8% rate applies to taxable income less than $23,000 for single filers and less than $46,000 for joint filers. The 7.15% rate applies to taxable income over $54,450 for single filers and over $108,900 for joint filers.

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

Military pensions and Railroad Retirement benefits are fully exempt.

In addition, up to $25,000 of other federally-taxed retirement income (including income from pensions, 401(k) plans and IRAs), minus Social Security and Railroad Retirement benefits, is exempt. The exemption is increased to $30,000 in 2023, and then to $35,000 in 2024 and thereafter.

Sales Tax

5.5% state levy. No local taxes.

Groceries: Taxable, but "grocery staples" are exempt
Clothing: Taxable
Motor Vehicles: Taxable
Prescription Drugs: Exempt

Real Property Taxes

Maine residents 65 years of age or older may be able to claim a Property Tax Fairness Credit of up to $1,500 against their state income tax (up to $1,000 for younger residents). For the 2021 tax year, total income for the year couldn't exceed $42,000 (single) or $68,000 (head of household, married filing jointly or qualified widow). (Income limits for the 2022 tax year have not yet been released.)

Residents age 65 or older who have owned a homestead in Maine for at least 10 years can also apply to have their property tax "frozen" so that it doesn't exceed the tax billed for the year before application. A new application is required each year for which a freeze is requested.

In addition, residents age 65 or older may qualify for a state property tax deferral program if their household income is less than $40,000 and their liquid assets are less than $50,000 ($75,000 for couples). Other requirements apply.

Municipalities in Maine may also enact a property tax deferral program for homeowners age 70 or older. The homeowner must reside in their home for at least 10 years before applying for a deferral and have a household income that doesn't exceed 300% of the federal poverty level. Municipalities can enact other property tax assistance programs for seniors, too.

Annual Car Taxes and Fees

An annual vehicle excise tax based on the car's age and sticker price (MSRP) is imposed.

Estate and Inheritance Taxes

Maine has an estate tax with an exemption of $6.01 million for 2022. Tax rates range from 8% to 12%.