State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees. Go to Retiree Tax Map Maine Add to State Compare List | View List View State Compare List (0) selected | Compare up to 5 The Bottom Line 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 $10,000 per person of eligible pension income can be deducted. 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 $22,200 for single filers; less than $44,450 for joint filers)High: 7.15% (on taxable income of $52,600 or more for single filers; $105,200 for joint filers)For 2021, the 5.8% rate applies to taxable income less than $22,450 for single filers and less than $44,950 for joint filers. The 7.15% rate applies to taxable income over $53,150 for single filers and over $106,350 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 $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. Sales Tax 5.5% state levy. No local taxes.Groceries: Taxable, but "grocery staples" are exemptClothing: TaxableMotor Vehicles: TaxablePrescription Drugs: Exempt Real Property Taxes Maine residents of 65 years or older may be able to claim a Property Tax Fairness Credit of up to $1,200 against their state income tax if their total income for the 2020 tax year did not exceed $42,000 (single) or $67,000 (head of household, married filing jointly or qualified widow). 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 $5.87 million for 2021 (the exemption amount is adjusted each year for inflation). Tax rates range from 8% to 12%.