In Maine, where rugged coastlines meet serene forests and lighthouses stand tall against Atlantic waves, even the tax system reflects the state’s distinctive character. Learning sales tax in Maine is a straightforward process, shaped by the state’s practical and no-nonsense New England approach.
This guide breaks down everything you need to know about Maine’s sales tax, from determining the right sales tax rates to understanding exemptions and filing processes. By the end of this comprehensive guide, you’ll be equipped to handle Maine’s sales tax with confidence and ease.
Sales Tax Nexus in Maine
When a business creates either a physical or economic nexus, it is required to collect sales tax in Maine.
Physical Nexus
A physical nexus means having a significant physical presence or engaging in enough activities within a state to require the collection and payment of sales tax. The factors that determine a physical nexus in Maine include:
- Physical Location: This includes having an office, a place for distribution, sales, or showcasing products, a warehouse or storage facility, or any other place where you conduct business.
- Inventory in the State: This covers situations where you store your products within the state, even if it’s done through a third-party fulfillment center or 3PL (like Amazon FBA) or an online marketplace.
- Employees, independent contractors, agents, or other representatives operating on your behalf.
- Affiliate Nexus: A retailer is considered to have a business in Maine if a related company in the state sells similar products, shares a name or branding, helps with deliveries, or supports the retailer’s business in any way.
- Presence at Trade Show: Attending a trade show in Maine doesn’t require an out-of-state business to collect tax, but if they take orders from Maine customers, they must collect tax on all sales, not just those from the trade show.
Economic Nexus
States have established regulations to collect sales tax from out-of-state sellers who meet certain revenue and/or transaction thresholds. This rule is known as economic nexus.
Beginning January 1, 2022, the threshold for economic nexus in Maine is $100,000 in gross revenue.
While the nexus criteria mentioned above generally apply to most businesses, additional methods exist for establishing economic sales tax nexus. To access a comprehensive list of these rules, please refer to the governing laws for economic sales tax nexus requirements in Maine.
Maine Sales Tax on Goods and Services
One of the first things you need to know is whether the goods you’re selling or services you’re offering are taxable in Maine.
Tangible Products
Almost all goods are taxable in Maine, including:
- Cosmetics
- Electronics
- Clothing
- Furniture
- Jewelry
- Home Goods
The goods that are exempt from sales tax are:
- Groceries – Grocery staples, which are basic foods for human nourishment, are not taxed, but this doesn’t include prepared foods or certain other items meant to be eaten or consumed.
- Diapers – Child diapers, both disposable and reusable, along with diaper covers, wraps, and pins for reusable diapers, are tax-free.
- Feminine Hygiene Products (i.e. pads, tampons, liners, and menstrual cups)
- Prescription Medications
- Medical Devices
- Agricultural Supplies: Seeds, fertilizers, and machinery used directly in farming are exempt.
Services
In Maine, most service-based transactions, such as advertising, employment services, and cleaning services are not subject to sales tax.
However, there are specific situations where certain services are taxable. For instance, taxable services are:
- Rentals or leases of automobiles
- Prepaid calling services
- Installation, maintenance or repair of telecommunications equipment
- Fabrication services
- Rental of video media and video equipment
Software as a Service (SaaS)/Digital Products
SaaS is not taxable in the state of Maine.
Digital products (i.e., ebooks, downloadable video content, mobile apps) are taxable. Digital products are taxed at the standard rate if their physical versions are also subject to sales tax.
Shipping/Handling
Shipping and handling charges in the state of Maine are not taxable. Shipping charges are not taxed if the product is shipped directly to the customer, sent via a carrier or U.S. mail, and the shipping cost is listed separately from the item’s price or other fees.
Sales Tax Permits and Licenses in Maine
Now that you’ve got a handle on when sales tax nexus applies and which products are taxable in Maine, the next important step is getting your Maine Seller’s Permit, also known as a sales tax permit.
Seller’s Permit
A common area of confusion for many new business owners is understanding the need for a Sales and Use Tax Permit, also known as a seller’s permit. You can register for a Maine sales tax permit online at the
Maine Tax Portal (MTP) or follow our detailed
step-by-step guide for assistance.
Ensure you have specific information on hand when registering for a seller’s permit, including, but not limited to:
- Business Identification Information (name, address, phone number, email address)
- Business Entity Structure (sole proprietorship, partnership, corporation, LLC, etc.)
- Federal Employer Identification Number (EIN or FEIN)
- Owner/Partner/Officer Information
- Business Activity Details (description of products or services sold, sales volume, date of the first sale or the expected date to start dates)
- NAICS code
Registration fee
There is no fee to register for a sales tax permit.
Renewal
In Maine, you don’t have to renew your sales tax permit.
Resale Certificate
A resale certificate is a document that allows businesses to buy products without paying sales tax on them as long as they plan to resell those items to customers, who will then pay the tax. As a seller, you can also accept resale certificates from others looking to buy for resale.
In Maine, sellers use resale certificates to buy goods from their suppliers that they intend to resell. The issuance of the certificates is always done in good faith that the seller would report tax on the final sale of the items.
You can fill out the
Uniform Sales & Use Tax Exemption/Resale Certificate provided by Maine after you receive your sales tax permit. If you don’t want the hassle of registering, sign up for our all-inclusive service that includes sales tax registration.
Streamlined Sales Tax (SST)
The Streamlined Sales Tax (SST) is an initiative to simplify and standardize sales tax regulations across multiple states. However, Maine is not a party to this program, meaning it does not follow the uniform rules and definitions established by SST but has its own sales tax regulations.
Check with the Maine Revenue Services for the most current information on Maine’s participation in the Streamlined Sales Tax initiative.
Calculating and Collecting Sales Tax in Maine
Sales Tax Computation
Maine keeps sales tax simple with a single statewide rate. No local taxes apply, so you only need to calculate based on the state’s fixed percentage.
Here’s an example. Suppose an out-of-state seller satisfies the economic nexus criteria in Maine and sells to a customer in Portland, ME, with a ZIP code of 04101. In that case, the seller has to charge the customer a total sales tax, which can be broken down as follows:
 |
SALES TAX FORMULA |
RATE |
| State: |
Maine |
5.50% |
| County: |
Cumberland County |
0.00% |
| District: |
First District |
0.00% |
| City: |
Portland |
0.00% |
| Combined Sales Tax Rate = |
5.50% |
|
Origin-based vs. Destination-Based
When making in-state sales, it is important to determine if you are located in an origin-based state or destination-based state to figure out what rate to charge for sales tax.
Maine is a destination-based state, meaning sales tax is determined based on the buyer’s location. That means for a Maine-based seller, sales tax is generally based on the location of the buyer when selling within the state.
For out-of-state or remote sellers, the sales tax rate is always determined by the buyer’s location. For instance, if you’re selling a product from Ohio to a customer in Bangor, Maine, where you have nexus, you’d apply Maine’s sales tax rate to that sale.
To make life easier, consider using sales tax software or consulting a tax professional, like TaxHero, to ensure accurate tax calculations and collections. Understanding these tax rules helps you stay compliant, whether you’re in-state or out-of-state.
Filing and Remitting Sales Tax Returns in Maine
The next step after collection is filing and remitting your Maine sales tax returns. Filing and remittance can vary in frequency, typically monthly, quarterly, or annually.
- Monthly Filing: Required if your average tax liability is $600 or more per month.
- Quarterly Filing: Applicable if your average tax liability is at least $100 but less than $600 per month.
- Semiannual Filing: For businesses with an average tax liability of less than $100 per month but more than $50 per year.
- Annual Filing: Permitted if your average annual tax liability is $50 or less.
It’s crucial to keep accurate records of your sales and tax collections and adhere to the filing schedule set by the state to remain compliant with Maine’s sales tax regulations.
Due Dates
In Maine, the due date falls on the 15th day of the following month. For instance, sales tax collected in January is due by February 15th for monthly filers.
However, if this day is a holiday, weekend, or in the rare occurrence of a natural disaster, the deadline is typically extended to the next business day. For instance, if you’re a monthly filer and filing sales tax for April, and the May 15th deadline falls on a holiday or weekend, you’ll have until May 16th, the following business day, to submit.
Filing Sales Tax Returns
To file your sales tax return for Maine, a few options are available:
- File online through the Maine Department of Revenue with Maine I-File.
- File by mail – You can file and pay using form ST-7 by mail.
- File with TaxHero – Let TaxHero take care of it so you don’t have to worry about missing a payment or return.
Timely Filing Discount
Some states offer a discount to businesses for collecting, filing, and remitting sales tax on time as an incentive to process sales taxes promptly. However, Maine does not offer a discount.
Sales Tax Holiday
Currently, for 2024-2025, there are no planned sales tax holidays in Maine.
Maine Sales Tax Penalties
Like in most states, sales tax is a big part of how Maine generates revenue. Thus, maintaining compliance with sales tax regulations is of utmost importance. Failure to do so can lead to consequences and sales tax penalties. Therefore, it is crucial always to ensure you are up-to-date in filing, collecting, and remitting sales tax to the state.
Here are the specific penalties for non-compliance with sales tax regulations in Maine:
- Failure to File: A Class D crime for the first offense, escalating to a Class C crime for repeat offenses. Filing with intent to evade is also a Class D crime but increases to Class C if the tax exceeds $2,000. Subsequent offenses exceeding $2,000 are Class B crimes.
- Failure to Pay: A Class D crime for the first offense, rising to a Class C crime for repeat offenses. Intentional non-payment is a Class D crime but becomes Class C if the tax exceeds $2,000. Subsequent offenses exceeding $2,000 are Class B crimes.
- Intent to Evade: A Class D crime initially, upgraded to Class C if the tax exceeds $2,000. Repeat offenses are Class C crimes or Class B if the tax exceeds $2,000.
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