Maine levies a graduated income tax with three brackets, ranging from 5.80% to 7.15%. The top rate of 7.15% applies to income above $61,600 for single filers and $123,100 for married filing jointly. Even the lowest bracket rate of 5.80% is relatively high compared to many states, giving Maine one of the higher overall income tax burdens in New England.

Maine conforms to the federal standard deduction ($14,600 single, $29,200 married filing jointly) and provides personal exemptions of $4,700 per person. These exemptions phase out for high-income taxpayers, beginning at $298,500 of AGI. Maine's starting point is federal adjusted gross income with state-specific additions and subtractions.

Maine does not tax Social Security benefits at the state level, following the federal exclusion. The state provides a pension income deduction of up to $35,000 per year for qualifying retirees, reduced by any Social Security benefits received. Military retirement pay is eligible for this deduction. Maine also offers a Property Tax Fairness Credit for residents who pay property tax or rent, with a maximum credit of $1,000 ($1,500 for seniors 65+).

Maine's sales tax rate is 5.50% with no local additions. Groceries and prescription drugs are exempt. The uniform statewide rate keeps the sales tax simple. Maine also has a 9.00% tax on restaurant meals and a 9.00% lodging tax, which are higher than the general rate and reflect Maine's tourism-heavy economy.

Property taxes in Maine average approximately 1.24%, above the national average. The state's property tax burden is a significant concern for residents, particularly in coastal towns with high property values. Maine's Homestead Exemption reduces the assessed value of a primary residence by $25,000. The Property Tax Fairness Credit provides additional relief through the income tax system for those whose property taxes or rent are disproportionate to their income.

Maine's cost-of-living index is approximately 108, slightly above the national average. Portland and its suburbs are the most expensive area, with housing costs driven by a tight market and growing appeal to remote workers. Northern and western Maine offer much more affordable living but with fewer employment opportunities. Year-round heating costs (typically oil or wood) are a significant household expense that is often underestimated by newcomers.