Does Maine Tax Social Security and Retirement Income?

Maine does not tax Social Security

Maine starts from federal adjusted gross income and then removes whatever part of Social Security was taxed federally. The amount goes on Schedule 1S, line 3, together with railroad retirement benefits (tier 1 and tier 2) and unemployment and sick benefits paid by the U.S. Railroad Retirement Board. There is no income limit and no age test: a couple with $70,000 of benefits and a large portfolio subtracts the same taxable amount as anyone else. (Maine Revenue Services, 2025 Form 1040ME General Instructions (Schedules 1A and 1S, tax table and rate schedules))

Benefits still shape the Maine return in one way. Line P3 of the pension deduction worksheet asks for the total Social Security and railroad retirement a person received, whether taxable or not, and subtracts it from that person’s $49,824 cap. A larger benefit is never taxed by Maine, but each dollar of it removes a dollar of room to deduct pension and IRA income. (Maine Revenue Services, 2025 Form 1040ME Schedule 1S with the Worksheet for Pension Income Deduction)

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

A per-person pension deduction, reduced by Social Security

The maximum pension income deduction is $49,824 for tax year 2026. Maine sets it each year at the annual Social Security benefit of a person retiring at full retirement age as of January 1, so it moves with Social Security from year to year. (Maine Revenue Services, 2026 Form 1040ES-ME, Estimated Tax for Individuals (revised July 2026))

The cap applies to each person separately, and a joint return has a column for each spouse. The worksheet runs the same way in both: eligible pension income (P1), the cap (P2), that person’s Social Security (P3), the cap less Social Security (P4), and the smaller of P1 and P4 (P5). Our single retiree has $40,000 of pension and IRA income and $30,000 of Social Security, so the deduction is $19,824 and the other $20,176 is taxed. In our first couple one spouse deducts $14,824 of $55,000, and the other deducts all $15,000 of their IRA income; the second spouse’s unused room cannot be moved to the first. (Maine Revenue Services, 2025 Form 1040ME Schedule 1S with the Worksheet for Pension Income Deduction)

Private-employer pensions qualify on the same terms as government ones. The instructions list state and federal pensions and plans under Internal Revenue Code sections 401(a), 401(k), 403 and 457(b). Only the person who earned the benefit can claim it, except that a surviving spouse may deduct survivor benefits up to the same cap. Distributions taken before age 55 that are not part of a series of equal periodic payments for life do not qualify, nor do lump sums reported on federal Form 4972. (Maine Revenue Services, 2025 Form 1040ME General Instructions (Schedules 1A and 1S, tax table and rate schedules))

For tax years beginning on or after January 1, 2025 the non-military deduction is reduced when federal AGI is above an applicable amount: $125,000 for single filers and $250,000 for joint filers in the statute. The reduction is the excess divided by $100,000, so the deduction is gone $100,000 above the threshold. The statute indexes those thresholds for later years, but Maine Revenue Services has not yet published the 2026 amounts, so our examples use the 2025 figures. On that basis our higher-income couple, with federal AGI of $279,500, loses 29.5% of a $29,648 deduction; an indexed threshold would cost them slightly less. (36 M.R.S. 5122, Modifications (subsection 2, paragraphs M-2 and M-3: pension income deduction and its phase-out))

Military retirement pay is fully exempt from Maine income tax, outside the cap that applies to other pensions. For tax years beginning on or after January 1, 2026 the definition covers all the uniformed services, which adds the National Oceanic and Atmospheric Administration and the Public Health Service to the Army, Navy, Air Force, Marines, Coast Guard and Space Force. (Maine Revenue Services, 2025 Session Legislation Enacted (summary of tax law changes))

IRA and 401(k) withdrawals share the pension deduction; Roth conversions do not qualify

Withdrawals from traditional IRAs, SEP and SIMPLE plans count as deductible pension income alongside employer pensions, and so do taxable distributions from Roth IRAs. They are not a second allowance: one cap of $49,824 less Social Security covers a person’s pension and account withdrawals together. Anything above it is taxed at 5.8% to 7.15% like other income. (Maine Revenue Services, 2025 Form 1040ME General Instructions (Schedules 1A and 1S, tax table and rate schedules))

A Roth conversion is different. The Schedule 1S instructions say that converting a traditional IRA to a Roth IRA does not qualify for the pension income deduction, because the taxpayer does not receive a retirement benefit at the time of conversion. The converted amount is in federal AGI and stays in Maine income in full, and because it raises federal AGI it can also push a household into the phase-out of the deduction on its ordinary withdrawals. (Maine Revenue Services, 2025 Form 1040ME General Instructions (Schedules 1A and 1S, tax table and rate schedules))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and capital gains are taxed as ordinary income

Maine has one rate schedule, applied to all Maine taxable income. Long-term capital gains and qualified dividends, which the federal return taxes at lower rates, are taxed at the same 5.8%, 6.75% and 7.15% as interest and pension income. A retiree realizing a large gain pays up to 7.15% on it, or 9.15% on the part of taxable income above the surcharge threshold. (Maine Revenue Services, 2026 Individual Income Tax Rates (revised May 20, 2026))

Interest on direct obligations of the U.S. government, such as Treasury bills and notes and Series EE savings bonds, is subtracted on Schedule 1S, line 1. Interest on bonds issued by other states and their municipalities, tax-free federally, is added back on Schedule 1A, line 1; the instructions give New York City bonds as taxable and Portland, Maine bonds as not. (Maine Revenue Services, 2025 Form 1040ME General Instructions (Schedules 1A and 1S, tax table and rate schedules))

For 2026 a single filer pays 5.8% on taxable income below $27,400, 6.75% from there to $64,850 and 7.15% above. For a joint return the thresholds are $54,850 and $129,750. The schedules state the tax as a whole-dollar base plus a percentage, for example $8,237 plus 7.15% of the excess over $129,750 for a couple. The bracket thresholds are indexed each year. (Maine Revenue Services, 2026 Individual Income Tax Rates (revised May 20, 2026))

A 2% surcharge applies for tax years beginning on or after January 1, 2026 to the portion of Maine taxable income above $1 million for single filers, $750,000 for married filing separately and $1.5 million for joint filers and heads of household. It was enacted in the 2026 session as part of L.D. 2212 (Public Law 2025, chapter 650) and brings the top marginal rate to 9.15%. The thresholds are indexed from 2027. (Maine Revenue Services, 2026 Session Legislation Enacted (summary of tax law changes))

The 2026 standard deduction is written into Maine law for this one year: a basic amount of $15,700 for single filers and $31,400 for joint filers, plus the additional amount the Internal Revenue Code allows for age and blindness. Those are its only two parts. The separate federal deduction for seniors is taken after federal AGI and is not in the Maine definition, so it does not reduce Maine taxable income. (Maine Revenue Services, 2026 Session Legislation Enacted (summary of tax law changes))

The standard deduction is itself phased out. When Maine adjusted gross income is above $102,250 (single) or $204,550 (joint), the deduction is reduced by the excess divided by $75,000 or $150,000, so it disappears entirely at $177,250 or $354,550. Itemized deductions are cut by the same fraction, and they are capped at $37,100 plus medical expenses for 2026. (Maine Revenue Services, 2026 Phaseout of Itemized / Standard Deductions Worksheet (36 M.R.S. 5124-C(2) and 5125(7)))

The personal exemption is $5,300 for the taxpayer and $5,300 for a spouse on a joint return. It phases out over $125,000 of Maine adjusted gross income starting at $341,000 for single filers and $409,150 for joint filers. Because the type on this page shows only the full amounts, our calculation applies both phase-outs; the third household, with Maine AGI of $199,098, stays under each threshold. (Maine Revenue Services, 2026 Phaseout of Personal Exemption Deduction Amount Worksheet (36 M.R.S. 5126-A(2)))

Form 1040ME lets a filer either look the tax up in the printed tax table or compute it from the rate schedules. Our examples use the schedules. The table works in $100 bands of taxable income, so a return prepared from it can differ from our figures by a few dollars. (Maine Revenue Services, 2025 Form 1040ME General Instructions (Schedules 1A and 1S, tax table and rate schedules))

A person who is 65 or older adds $2,050 to the standard deduction if unmarried and $1,650 if married, the same additional amounts as on the federal return. A couple who are both 65 deduct $34,700 in 2026 before any phase-out, and a single filer $17,750. (Maine Revenue Services, 2026 Individual Income Tax Rates (revised May 20, 2026))

The pension income deduction is Maine’s main retirement break, and it is not tied to age 65. The statute sets no minimum age for IRA income; for employer plans it excludes only distributions made before age 55 that are not part of a series of substantially equal periodic payments for life. Distributions subject to the federal 10% early-withdrawal tax are excluded as well. (36 M.R.S. 5122, Modifications (subsection 2, paragraphs M-2 and M-3: pension income deduction and its phase-out))

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Maine's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

For comparison with other states, Tax Foundation figures drawn from Census data put Maine property taxes at 0.98% of owner-occupied home value in 2024, 19th highest among the states. On a $500,000 home that is about $4,900 a year. This is a comparative figure; municipalities set their own rates and bills vary widely between towns. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

The homestead exemption removes up to $25,000 of just value from the taxable value of a permanent resident’s home, provided the owner has owned homestead property in Maine for at least 12 months and lives there on April 1. The municipality adjusts the $25,000 by its certified assessment ratio, and the application goes to the local assessor by April 1. A veteran who served in a recognized war period and is 62 or older can exempt a further $6,000. (Maine Revenue Services: Property Tax Relief (homestead, veteran and blind exemptions))

The Property Tax Fairness Credit is a refundable credit claimed on the income tax return (Schedule PTFC/STFC). For tax year 2025 a household in which either spouse is 65 or older qualifies with total income under $102,500, counting non-taxable Social Security, and receives the amount by which property tax, up to a $4,100 benefit base, exceeds 4% of income, to a maximum of $2,000. Renters count 15% of rent as property tax. The 2026 income limits and benefit base are not yet published. (Maine Revenue Services, 2025 Schedule PTFC/STFC, Property Tax Fairness Credit and Sales Tax Fairness Credit)

Maine’s 2022 Property Tax Stabilization program, which froze the tax bill of homeowners 65 or older who had owned a Maine homestead for at least 10 years, no longer operates. The statute now states that it applies only to the property tax year beginning April 1, 2023. (36 M.R.S. 6281, Stabilization of property taxes on homesteads of individuals 65 years of age or older)

Under the State Property Tax Deferral Program the State pays a participant’s property taxes each year, including up to two years of delinquent taxes, until the owner withdraws or no longer qualifies. The owner, or the estate or heirs, must then repay the total deferred taxes plus interest and costs. The filing period for the 2026 tax year ran from January 1 to April 1, 2026. (Maine Revenue Services: State Property Tax Deferral Program)

The general sales tax rate is 5.5%. Higher rates apply to a few categories that retirees meet mostly when eating out or travelling: 8% on prepared food and on liquor sold in licensed establishments, 9% on lodging and 10% on short-term car rentals. (36 M.R.S. 1811, Sales tax (rates))

Grocery staples are exempt from sales tax, and so are medicines for human use sold on a doctor’s prescription. Prosthetic and orthotic devices sold on a practitioner’s order are exempt too. (36 M.R.S. 1760, Exemptions (subsection 3 grocery staples, subsection 5 medicines))

Maine has no local sales taxes. The Tax Foundation’s midyear 2026 comparison lists a 5.5% state rate, a 0% average local rate and a combined rate of 5.5%, 43rd among the states. (Tax Foundation, State and Local Sales Tax Rates, Midyear 2026 (comparative figures))

For deaths in 2026 the Maine exclusion amount is $7,160,000, up from $7,000,000 in 2025; it is adjusted each year. A Maine taxable estate above that pays 8% on the next $3 million, then $240,000 plus 10% of the amount over $10,160,000, then $540,000 plus 12% of the amount over $13,160,000. An estate of $9 million owes $147,200. The tax is figured on the estate as a whole, not on what each heir receives. (Maine Revenue Services: Estate Tax (706ME), exclusion amounts and rate tables)

The Maine taxable estate adds back taxable gifts made within one year of death. A return on Form 706ME is required when the gross estate plus those gifts exceeds the exclusion amount, even if deductions bring the tax to zero. Because the federal exclusion is now higher than Maine’s, an estate with a surviving spouse can make a Maine QTIP election for an amount up to the difference, which postpones Maine tax on that property until the second death. (Maine Revenue Services, Guidance Document: Maine Estate Tax for Deaths Occurring After 2012 (revised May 2026))

Maine’s statute defines the exclusion as a single dollar amount for each decedent and has no rule that adds a deceased spouse’s unused exclusion to the survivor’s. A couple who leave everything outright to each other therefore have one exclusion at the second death, not two. Wills and trusts that set property aside at the first death are how couples keep the first exclusion from being lost. (36 M.R.S. 4102, Definitions (Maine exclusion amount, Maine qualified terminable interest property))

The estate of a non-resident who owned real or tangible personal property in Maine is within the tax as well. A return is required when the whole federal gross estate, not just the Maine property, is over the exclusion amount. Form 706ME is due nine months after death, and Maine places an automatic lien on a decedent’s Maine property until the tax is settled or a discharge is issued. (Maine Revenue Services: Estate Tax FAQ (filing requirement, non-resident estates, liens))

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

The 2026 legislative session set the standard deduction for three years in a row. It is $15,000 (single) and $30,000 (joint) for 2025, $15,700 and $31,400 for 2026, and from tax years beginning on or after January 1, 2027 it equals the federal standard deduction, still subject to Maine’s phase-out. The same session enacted the 2% surcharge and a pass-through entity tax, both from 2026. (Maine Revenue Services, 2026 Session Legislation Enacted (summary of tax law changes))

For 2027 Maine Revenue Services has published brackets of $28,250 and $66,850 for single filers and $56,500 and $133,750 for joint filers, a $5,450 personal exemption and a standard deduction of $16,600 or $33,200 with additions of $2,100 or $1,700 at 65. The surcharge thresholds rise to $1,030,400 and $1,545,600. (Maine Revenue Services, 2027 Individual Income Tax Rates (November 5, 2026))

The pension deduction changed twice in 2025 legislation: the income phase-out described above took effect for 2025, and the rule excluding distributions before age 55 was widened to cover them whether or not the federal 10% early-distribution tax applies. The cap rose from $48,216 for 2025 to $49,824 for 2026. (Maine Revenue Services, 2025 Session Legislation Enacted (summary of tax law changes))

On the property side, the homestead, veteran’s and blind person’s exemptions are consolidated into one provision for property tax years beginning on or after April 1, 2027. The new law drops the requirement that a veteran served in a recognized war period, extends the exemption to veterans under 62 and tiers it by disability rating. Homeowners who received one of the exemptions for April 1, 2026 will generally not need to reapply. Separately, the maximum Property Tax Fairness Credit for people under 65 rises to $1,500 for tax years beginning on or after January 1, 2026; it stays $2,000 at 65 and over. (Maine Revenue Services, 2026 Session Legislation Enacted (summary of tax law changes))

A full-year Maine resident is taxed on all income, whatever its source. A person is a resident either by domicile, meaning Maine is the permanent home they intend to return to, or as a statutory resident: someone domiciled elsewhere who maintains a permanent place of abode in Maine and spends more than 183 days of the year in the state, counting any part of a day as a full day. (Maine Revenue Services, Guidance Document: Determining Residency Status (revised February 2026))

A seasonal camp or cottage used only for vacations is not a permanent place of abode, which matters to the many out-of-state owners of summer property. Maine Revenue Services advises people who keep a year-round home in Maine but claim domicile elsewhere to keep calendars, travel records and receipts showing that more than half the year was spent outside the state. (Maine Revenue Services, Guidance Document: Determining Residency Status (revised February 2026))

Someone still domiciled in Maine is treated as a non-resident under the general safe harbor if they keep no permanent place of abode in Maine, keep one elsewhere and spend no more than 30 days of the year in Maine. A person who changes domicile during the year is a part-year resident, taxed on all income received while a resident plus Maine-source income for the rest of the year. Non-residents generally owe no Maine tax on pensions, interest or dividends. (Maine Revenue Services, Guidance Document: Determining Residency Status (revised February 2026))

Federal law (4 U.S.C. 114) bars a state from taxing the retirement income of a person who is neither a resident nor domiciled there. A pension or 401(k) earned over a Maine career is therefore not taxed by Maine once the retiree has genuinely moved away. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)