Individual Income Tax Forms
Form 1040X-ME Maine Amended Individual Income Tax Return
Corporate Income Tax Forms
Form 1120X-ME Maine Amended Corporate Income Tax Retrun
Sales Tax Forms
Form Uniform Sales and Use Certificate
There are a number of taxes applicable to the state of Maine, which includes sales tax and four income brackets for personal income taxation. Tax returns are due on April 15.
Maine state sales tax – 5% (food and drugs exempt), $1.50 per 100 pounds of blueberries.
There are addition sales taxes of 7% of lodging and 10% on car rentals, exemptions available for schools, charities, hospitals and related organizations.
Maine state personal income tax
Four income brackets for single filings
2% – first 4,950 of taxable income
4.5% – $4,951 – $9,850
7% – $9,851 and $19,750
8.5% – $19,751+
For married couples
2% – first 9,950 of taxable income
4.5% – $9,951 – $19,750
7% – $19,751 and $39,550
8.5% – $39,551+
Maine state excise taxes
Taxes are assessed on vehicles, alcohol, tobacco, gasoline, forested property and are in addition to federal excise taxes.
$2.00/package of 20 cigarettes
$4.56 tax per gallon of liquor
$.35 per gallon of beer
$.60 per liter of wine
Vehicles – MSRP multiplied by the “millage rate.” The age of the car determines the “mil rate”
Gasoline – 31 cents/gallon
Diesel – 32.2 cents/gallon
Taxation on landowners of 500 acres of commercial forest land for forest fire prevention expenditures, which is generally 35 to 45 cents per acre.
Maine estate tax
Maine imposes an estate tax on estates valued at $1 million or more, regardless of federal law. There is no inheritance tax.
Maine payroll taxes
State Disability Insurance – none
State Unemployment Insurance – .92% to 8.01%, wage base is $12,000. Employer contribution is 1.53%.
Minimum wage – $7.50/hr
Maine state property tax
All property is taxable in Maine unless otherwise noted. Government and school properties are exempt from taxation. The Maine State property tax is collected at the local level, which assesses property. Maine offers a homestead exemption on $10,000 on the person’s house if it is intended to be a permanent home.
Exemptions
There is an exemption of up to $6,000 for veterans over the age of 62 and served in a recognized war period or is receiving 100% disability veteran’s benefit. This increases to $50,000 for paraplegic veterans.
Legally blind individuals receive an exemption of $4,000.
Corporate income tax
Under $ 25,000 3.5% of federal taxable income
$ 25,000 – $ 75,000 $875 plus 7.93% of the excess over $ 25,000
$ 75,000 – $ 250,000 $4,840 plus 8.33% of the excess over $ 75,000
$ 250,000 or more $19,418 plus 8.93% of the excess over $250,000
Misc
Military personnel are taxed by federal income tax laws, unless they make non-military income in Maine. The military income is not used in determining income for taxation in Maine. Military benefits are not taxed.
Sales Tax
Over the years, Maine sales tax has varied in terms of both increases and decreases. In general, Maine sales tax is that which is placed upon all items considered either “tangible personal property” or “taxable services sold at retail” within the state of Maine. According to Maine law, personal property encompasses that which may be physically seen as well as measured or weighed, and felt. Although, most services are not usually taxed, examples of some that are include: rental of hotel rooms, automobiles, as well as phone services you pay for in advance.
In order to better understand Maine sales tax law, we must also ascertain the definition that the state applies to the term “sale.” It is described as any transaction, which may include “leases and contracts” that must be compensated in order to acquire and use, but only when the ‘State Tax Assessor’ labels them as part of a purchase. Quite another distinction occurs when the term “retail” is added to the mix as we have mentioned early in relation to the employment of sales tax. Four Maine sales tax rates cover that of general services at 5%, lodging/prepared food at 7%, and short term auto rental at 10%.
Exemptions to Maine sales tax also exist, which is exhibited by some organizations that fall under the following general categories: medical/health care, educational, governmental, religiously affiliated, and nonprofits. Specific organizations that may find themselves eligible include those that distribute ambulance services, dyslexia aid for kids, fire departments, churches, nursery schools, and animal shelters.
Income Tax
When referencing Maine income tax, one must take into account individual as well as business income tax. In relation to individual Maine income tax, a general income tax is placed upon any individuals who derive their income from the state. This may range from 2% to that of 8.5%. In addition, if you are in the possession and ownership of an estate, you will also incur estate taxes. Maine places a specified tax upon estates that are worth more than a million dollars.
This applies, according to Maine tax law, despite a lack of a federal estate tax. Corporations are taxed according to Maine income tax law with amounts varying from 3.5% for income $25,000 or below, and 8.93% for that which exceeds $250,000. S-corporations, however, are exempt from corporate income tax impositions. Despite its exemption, an S-corporation must still file returns each year in order to inform the state of Maine of the incomes of the company as well as its partners and shareholders.
In the event that the company includes individuals who are not actually residents of Maine, the company may require adherence to “withholding requirements” for those members. In such a case, the company may choose to file a “composite” tax return in order to encompass all nonresident income into on return.
Maine State Tax: A Comprehensive Guide
Taxes are an essential part of any modern society. They fund the government’s operations, including social welfare programs, infrastructure projects, public schools, and many others. In the United States, each state has its own tax system, and Maine is no exception. Maine State tax is an important topic for every resident and business owner in the state, and in this article, we will provide a comprehensive guide.
History of Maine State Tax
The history of Maine State tax can be traced back to the early 1800s. At that time, the state relied heavily on property taxes to fund its operations. However, as the state grew, the need for a more balanced tax system became evident. In 1969, Maine became one of the first states to adopt an income tax. The tax system has gone through various changes since then, with the latest being in 2013, when the state’s legislature made a significant overhaul to the tax code.
Maine State Tax System
The Maine State tax system is made up of several taxes levied by the state and municipalities. The major taxes levied on residents and businesses in Maine are:
1. Income Tax
The income tax is the most significant source of revenue for the state. Maine’s income tax system has a progressive rate structure, meaning that those with higher incomes pay a higher percentage of their income in taxes. In 2021, the tax rate ranges from 5.8% to 7.15%, depending on income level. The tax system also has several credits and deductions available to taxpayers, including the Earned Income Tax Credit (EITC) and the Property Tax Fairness Credit.
2. Sales Tax
Maine’s sales tax has a flat rate of 5.5% on all retail sales, with a few exceptions. The exceptions include food, medical equipment, and certain services such as heating and electricity. Municipalities may also levy an additional local sales tax of up to 1%.
3. Property Tax
Property tax is a significant source of revenue for municipalities in Maine. The tax is based on the value of the property, and each municipality sets its own tax rate. Property tax is used to fund local operations such as schools, fire departments, and public works projects.
4. Excise Tax
Excise tax is levied on certain goods and services, including motor vehicle registration fees, cigarettes, and alcohol. The tax rate for motor vehicle registration is based on the vehicle’s manufacturer’s suggested retail price (MSRP) and the year of manufacture. For cigarettes, the tax rate is $2 per pack, and for alcohol, it ranges from $0.35 to $8.00 per gallon, depending on the type of beverage.
5. Estate Tax
Maine has an estate tax that applies to estates with a value of more than $5.9 million. The tax rate ranges from 8% to 12%, depending on the value of the estate.
6. Corporate Tax
Maine’s corporate tax is a flat rate of 8.93% on net income earned by corporations doing business in the state.
Tax Filing and Payment
Residents and businesses in Maine must file and pay their taxes on time to avoid penalties and interest charges. The due date for income tax returns is April 15th, although residents can request an extension until October 15th. Sales tax and excise tax must be remitted monthly or quarterly, depending on the amount of tax owed. Property tax bills are issued annually, and the due date varies depending on the municipality.
Tax Credits and Deductions
Maine State offers several tax credits and deductions that can help reduce the tax burden for residents and businesses. Some of the most notable credits and deductions include:
1. Earned Income Tax Credit (EITC)
The EITC is a federal tax credit designed to help low-income families. Maine has its own EITC, which is equal to 5% of the federal credit.
2. Property Tax Fairness Credit
The Property Tax Fairness Credit is designed to help low-income residents offset property tax bills. The credit is based on income level and the amount of property tax owed.
3. Education Tax Credits
Maine offers two education tax credits: the Education Opportunity Credit and the Education Tax Credit. The former is designed to help families pay for private school tuition, while the latter helps offset the cost of higher education.
4. Charitable Donations
Maine allows taxpayers to deduct charitable donations from their state income tax.
Recent Changes to Maine State Tax
Maine State tax system has undergone several changes in recent years. Some of the notable changes include:
1. 2013 Tax Overhaul
In 2013, Maine lawmakers passed a significant tax overhaul that lowered income tax rates and increased the sales tax rate. The overhaul also eliminated several tax deductions and credits, including the Circuit Breaker credit.
2. Remote Sales Tax
In 2019, Maine became one of the many states to adopt a remote sales tax. The tax requires out-of-state retailers to collect and remit sales tax on sales made to Maine residents.
3. Minimum Wage Increase
Maine’s minimum wage increased to $12.15 per hour in 2021. The increase is part of a gradual phased increase that started in 2017.
Conclusion
Maine State tax is an important topic that affects every resident and business owner in the state. By understanding the system’s workings and available credits and deductions, taxpayers can reduce their tax burden and comply with tax laws. As the state’s tax system continues to evolve, taxpayers should keep abreast of changes and how they impact their tax bills.
Introduction
The state of Maine is known for its natural beauty, picturesque coastlines, and seafood delicacies. However, for those who reside or operate a business in Maine, taxes are an unavoidable aspect of life. This article will delve into the various types of taxes levied in Maine, the rates, and exemptions, as well as recent changes to the tax system.
Types of Maine Tax
Maine imposes several different types of taxes on both individuals and businesses. The main categories of taxes include:
Income Tax: This tax is imposed on individuals, businesses, associations, and other entities that receive income in Maine. Maine has a graduated income tax system, meaning that the tax rate increases as the amount of income increases.
Sales Tax: The sales tax is imposed on the sale of tangible personal property and certain services. The current rate of sales tax in Maine is 5.5%.
Property Tax: The property tax is collected by local governments and is based on the value of the property. This tax is used to fund local services such as schools, roads, and emergency services.
Estate Tax: Maine also imposes an estate tax on the estates of individuals who are Maine residents or own property in Maine. The tax is based on the value of the estate and ranges from 8% to 12%.
Corporate Tax: Corporations that do business in Maine are also subject to corporate tax. The tax rate is based on the net income of the corporation and ranges from 3.5% to 8.93%.
Rates and Exemptions
Maine’s income tax rates range from 5.8% to 7.15% depending on the taxable income of the individual. The current tax brackets and rates are as follows:
– 5.8% on the first $4,850 of taxable income
– 6.75% on taxable income between $4,851 and $10,150
– 7.15% on taxable income between $10,151 and $20,900
– 7.15% on taxable income between $20,901 and $50,350
– 7.15% on taxable income between $50,351 and $250,000
– 7.15% on taxable income over $250,000
Exemptions and deductions are available to reduce the amount of taxable income. The most common exemptions include:
– Personal Exemption: $4,150 for individuals and $8,300 for married couples filing jointly
– Dependent Exemption: $4,150 per dependent
– Itemized Deductions: deductions for mortgage interest, charitable contributions, and medical expenses are allowed for taxpayers who choose to itemize their deductions instead of taking the standard deduction.
Maine’s sales tax rate is 5.5%, which is lower than the national average of 7.12%. However, some items are exempt from sales tax, including food (except for prepared foods), medicine, and clothing.
Property tax rates vary depending on the location of the property. The average effective property tax rate in Maine is 1.22%. The rate is based on the assessed value of the property, which is determined by the local government. Homeowners who reside in their primary residence may be eligible for a homestead exemption, which reduces the taxable value of the property by $25,000.
Maine’s estate tax applies to estates valued over $5.7 million. The tax rate ranges from 8% to 12% depending on the value of the estate. The first $2 million of the estate is exempt from tax.
Maine’s corporate tax rates range from 3.5% to 8.93%. The tax rate is based on the net income of the corporation. Businesses that make less than $3,000 in net income are not required to pay corporate tax.
Recent Changes to Maine Tax System
In 2019, Maine Governor Janet Mills signed a bill that increased the state’s homestead exemption. The new law increased the exemption from $20,000 to $25,000, which means that eligible homeowners will pay less property tax.
In 2015, Maine passed a law that phased out the estate tax over the course of three years. However, in 2019, the Maine Legislature reversed course and reinstated the estate tax with a $5.7 million exemption. The move was made to help fund education and other state services.
In 2013, Maine enacted a law that increased the personal exemption from $2,000 to $3,000. The law also increased the earned income tax credit for low-income families.
In 2011, Maine passed a law that lowered the corporate tax rate from 8.5% to 7.93%. The move was made to help businesses operating in Maine to remain competitive with neighboring states.
Conclusion
Maine’s tax system is complex and can be confusing for those who are not familiar with the state’s laws and regulations. However, by understanding the types of taxes, rates, and exemptions, individuals and businesses can better prepare for tax season. Maine’s recent tax changes, such as the increase in the homestead exemption and the reinstatement of the estate tax, are designed to benefit Maine residents and fund important state services. Whether you are a homeowner, business owner, or just a taxpayer in Maine, it is important to stay informed about the state’s tax laws and regulations.
