The Maine franchise tax is imposed on banks and financial institutions. Maine law provides two tax options for the franchise taxpayer:
- 1% of Maine income and 0.008% of Maine assets
- 0.039% tax on Maine assets only.
The tax applies to financial institutions with Maine income, even if organized as a pass-through entity.
Maine does not have a franchise tax for LLCs. Instead, Maine has an income tax that applies to LLCs on a progressive scale based on income level. This tiered system benefits small or new businesses with low income.
Some key points on business taxes in Maine:
- No franchise or privilege tax
- Individual income taxes depend on income level
- Sales tax of 5.5%-6.5% on goods; some services also taxed
- Estimated tax payments required if owing $1000+
- Unemployment insurance tax for employers
- No corporate income tax
- Maine ranked number 4 in the U.S. for states with the highest taxes as a portion of personal income.
- Property tax rates in Maine are above the U.S. average with an effective rate of 1.30%. The national average is 1.07%, and a typical resident pays $2,597 a year.
Goods subject to sales tax in Maine include:
- Furniture
- Home appliances
- Motor vehicles
Exemptions include:
- Groceries
- Prescription medicine
- Gasoline