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Maine’s state sales tax rate is 5.5 percent on retail sales. It has several other taxes it charges, including a marijuana tax, lodging tax, and vehicle rental tax. Maine also charges excise fees for tires and batteries. Maine does not have discretionary taxes – local sales taxes charged by local cities and counties.
Types of taxes
The main tax that businesses must pay in Maine is the 5.5 percent sales and use tax on sales of goods and some services. Most services are not taxable.
Sales and use tax
The sales and use tax cover most tangible personal property. The use tax is paid by individuals and businesses when they purchase something taxable without paying the tax and without reselling the item.
Individuals who order goods from an out-of-state vendor or marketplace seller must also pay the use tax if the seller does not charge Maine’s sales tax.
The use tax is not a tax that a business pays on top of the sales tax. Rather, the business pays the use tax, which has the same 5.5 percent tax rate as the sales tax, in lieu of paying the sales tax.
Prepared food, regardless of where it is sold, is taxable at the 8 percent tax rate. Prepared food includes meals served on or off the premises, such as sandwiches and heated food. Fully cooked frozen sandwiches are exempt.
- Any food and drink prepared by the retailer that is ready for consumption are taxable, including salad bars and other self-serve areas.
- Bakery items, including donuts, cookies, bagels, etc., are taxable.
- Deli platters and bakery platters are taxable.
- Slicing and cutting grocery staples are exempt. For example, if a retailer slices a pound of ham from the deli, this is not taxable.
Long-term auto rental
Leases of auto rentals for more than a year are taxed at the 5.5 percent tax rate. A long-term auto rental is generally a lease from a dealership, where a business might lease a vehicle instead of purchasing it. Business fleets are often leased vehicles.
Short-term vehicle rental tax
Leasing a vehicle for the short-term – less than a year – is taxed at the 10 percent tax rate. This includes:
- Pickup trucks and vans with a gross vehicle weight lower than 26,000 pounds; and
- Loaner vehicles if not provided by a motor vehicle dealer while servicing the customer’s vehicle.
Lodging, including hotels, trailer camps, tourist camps, and rooming houses, are taxable at 9 percent.
Exemptions to the lodging tax include:
- Casual rentals for less than 15 days. These include someone who rents out a single room or a single condo unit for less than 15 days in a calendar year.
- Rental occupancy for 28 or more days, as long as the living quarters are the renter’s primary residence or the renter has another primary residence but is renting for purposes of attending school or working. The school must be an accredited secondary school or college and the renter must be enrolled.
Adult use marijuana
Those who sell adult use marijuana must pay an excise tax. The cultivation facility pays a 15 percent tax when selling to or transferring to a retailer.
If the cultivation facility sells or transfers marijuana to registered dispensaries or registered primary caregivers to qualifying patients, it is exempt from paying the tax.
Retailers must also collect a marijuana tax of 10 percent on marijuana and marijuana products the business sells. As with cultivators, those who sell to qualifying patients via registered dispensaries or registered primary caregivers are exempt from collecting and paying the sales tax.
Service provider tax
- Video media and video equipment rentals.
- Ancillary services.
- Audio media and equipment are pursuant to a rental-purchase agreement.
- Furniture pursuant to a rental-purchase agreement.
- Telecommunications equipment installation, repair and/or maintenance.
- Telecommunications services.
- Fabrication services.
- Extended cable and satellite television services.
- Community support services for mental health diagnoses.
- Community support services for intellectual disabilities.
- Community support services for autism.
- Private non-medical institution services.
- Home support services.
Maine also charges fees for certain industries, as follows:
- Tires and lead-acid batteries: $1 per item tire or battery.
- Prepaid wireless: $1.
- Pesticide fee: $0.12 per container.
Registering for and filing Maine’s taxes
To register for an account to file sales tax returns and remit payments, you will need the business’s FEIN number or your Social Security number, depending on how you registered your business with the state.
Businesses file sales tax returns electronically. When creating the password for the account, remember that passwords are case sensitive and need at least 12 characters, including one uppercase letter, a numeric character, one lowercase letter, and one special character.
You can also file manually. If you choose to use paper filings, make the check out to the State Treasurer and mail the sales and use tax return along with the check for the amount of sales tax due to Maine Revenue Services, PO Box 1065, Augusta, ME 04332-1065.
Due dates for tax returns and tax liabilities are:
- On or before the 15th of the month following the month that the business collected taxes for monthly filers.
- On or before the 15th of the month following the end of the quarter for quarterly business taxpayers. For example, the first quarter runs from January through March. The tax return and payment are due on or before April 15.
- On or before July 15 and January 15 for semi-annual filers.
- On or before January 15 for annual filers.
Maine tax exemptions
Maine does not use a blanket sales tax exemption for nonprofit organizations. Only certain organizations qualify. Although some are 501(c)(3) organizations, not all qualify for Maine’s tax exemption.
Qualifying entities must apply to the Maine Revenue Services with information about their businesses. Depending on which exemption the business is applying for, the requirements to qualify for tax exemptions vary from industry to industry.
Calculating Maine’s sales and use tax rates
To calculate Maine’s retail sales tax, multiply the percentage as a decimal by the purchase price of each item the business sells. For example, Widget A sells for $100. The tax is 0.055. The tax is $5.50. The total due from the consumer is $105.50.
For taxable services, multiply the rate of 6 percent by the total labor or rental price. For example, for a video rental that costs $50, the sales tax is $3 for a total sale of $53. Always keep the tax on a separate line.
For fabrication services that have a total of 100 hours at $75 per hour, find the total labor rate by multiplying 100 times the cost per hour for a total of $7,500. Multiply the total labor cost by 6 percent: .06 times 7,500 equals $450. The total the business charges for labor is $7,950. Always keep the tax on a separate line.
Remote and marketplace sellers
Remote sellers and marketplace sellers must collect sales and use taxes to any person living in Maine or a business that has a physical presence in Maine if the items purchased are shipped to the state. All out-of-state sellers that have customers in Maine must register with the state, collect Maine’s sales and use taxes, and remit tax returns and payments to the Maine Revenue Services.
Should an out-of-state seller need assistance, it can call (207) 624-9693 or e-mail [email protected]. Hours for the Maine Revenue Service are Monday through Friday from 9:00 a.m. through Noon, eastern standard time.
Maine does not have a sales tax holiday.
The general sales tax rate for Maine is 5.5 percent.
Upon registration of a business, the state automatically issues a tax exemption certificate. If the business did not receive one, it did not have an active account, or it did not report gross sales of $3,000 or more the previous year.
It depends on the state. Most states require you to meet the threshold of $100,000 in sales or 200 individual transactions in the prior year. However, most businesses, as a courtesy to their customers, charge sales tax even if they don’t meet the thresholds.
No. Remote sellers must register for an account with the Maine Revenue Services to submit tax returns and payments.
No. The fees to dispose of tires and batteries are not taxable.
If the business has less than $3,000 in sales the previous year, the Maine Revenue Services will not forward a resale certificate.
No. Personal services, such as haircuts, dry cleaning, pet grooming, carpentry, and landscaping, are not taxable.
Services that are sold in conjunction with a tangible personal property are taxable. For example, if a business sells a watch and the customer asks to have the watch engraved, the engraving service is taxable.
If an individual or business trades a used vehicle or equipment in and buys like property, the new property is taxed at the same rate of 5.5 percent. However, the business only charges tax on the difference between the amount allowed for the trade-in and the purchase price.
Yes. Deduct the bad debt from gross sales on the “Bad Debt Credit” line. This credit is only available for items the business paid sales tax to the state and then later charged off as bad debt.