The Tax Foundation

Research Areas

Maine

The Facts on Maine's Tax Climate

Here are some basic facts on Maine's tax system and how it compares to other states:

Tax Freedom Day Arrives on April 20 in Maine
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Maine taxpayers had to work until April 20 (ranked 22nd highest nationally) to pay their total tax bill, three days before Tax Freedom Day for the nation as a whole on April 23. The Tax Freedom Days of neighboring states are: New Hampshire on April 15 (35th nationally) and Massachusetts on April 28 (6th nationally).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Maine's State/Local Tax Burden Second Highest in Nation in 2007
During the past three decades Maine has consistently had one of the highest state and local tax burdens. Estimated at 14.0% of income, Maine's state/local tax burden is 2nd highest in the nation, and remains well above the national average of 11.0%. Maine taxpayers pay $5,045 per-capita in state and local taxes, and per capita state income is $36,117.
Maine's State-Local Tax Burden, 1970-Present

Maine's 2008 Business Tax Climate Ranks 41st
Maine ranks 41st in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: New Hampshire (7th) and Massachusetts (34th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

Maine's Individual Income Tax System
Maine's personal income tax system consists of four brackets with top rate of 8.5%, kicking in at an income level of $18,950. Among states levying personal income taxes, Maine's top rate ranks 7th highest nationally. Maine's 2005 individual income tax collections were $986 per person, which ranked 13th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Maine's Corporate Income Tax System
Maine's corporate tax structure consists of four brackets with a top rate of 8.93%, kicking in at an income level of $250,000. Among states levying corporate income taxes, Maine's top rate ranked 9th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $142.27 per capita and ranked 26th nationally.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Maine Levies Sales Tax Slightly below National Median; Cigarette Taxes among Highest in the Nation
Maine levies a 5% general sales or use tax on consumers, slightly below the national median of 5.4 percent. State and local governments combined collected approximately $1,039 per capita in sales taxes in 2005, which ranks 41st highest nationally. Maine's gasoline tax stands at 29.1 cents per gallon and ranks 16th highest nationally. Maine's cigarette tax stands at $2.00 per pack of twenty, which ranks 4th highest nationally. The sales tax was adopted in 1951, the gasoline tax in 1923 and the cigarette tax in 1941.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Maine Property Taxes among Nation's Highest
Maine collected $2,099,394,000 in combined state/local property taxes during fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. As in most states, the amount collected by the state government of Maine was fairly small. In fiscal year 2004, Maine collected $45,308,000 at the state level. At the local level, Maine's property tax collections are substantial. They totaled $2,054,086,000 in FY 2004. Overall, Maine's property taxes collected per capita in FY 2004 was $1,596, which ranked 6th nationwide. (Non-resident property tax payments are included in Census data.)
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Maine is a Beneficiary State:
Maine taxpayers receive more federal funding per dollar of federal taxes paid than the average state. Per dollar of federal tax collected in 2005, Maine citizens received approximately $1.41 in the way of federal spending. This ranks the state 13th highest nationally and represents a rise from 1992, when Maine received $1.30 per dollar of taxes in federal spending and ranked 9th highest nationally. Neighboring states and the federal spending received per dollar of federal taxes collected were: New Hampshire ($0.82) and Massachusetts ($0.71).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

Articles from the Tax Foundation