Last Updated: April 2026
Maine has the second-highest top income tax rate in New England at 7.15% (behind Vermont's 8.75%). Maine is a high-tax state relative to its size and economy, with a compressed upper bracket that kicks in at a relatively low income threshold. Maine taxes Social Security for residents above modest income levels, partially exempts military retirement, and levies property taxes well above the national average. The nearby presence of New Hampshire — which has no income tax on wages or retirement income — creates a clear migration incentive for higher-income Maine residents, particularly in the southern Maine / Portsmouth NH corridor. This guide covers what Maine residents considering a move need to know.
Maine's proximity to New Hampshire makes the comparison particularly relevant — southern Maine residents in the Portland, Portland-South, and York County areas often live within commuting distance of New Hampshire.
New Hampshire taxes only interest and dividend income (at 4% declining to 3% by 2025 and 0% by 2027 under HB 2 2021 phase-out). It has zero income tax on wages, salaries, retirement income, and capital gains. Maine taxes all of these at up to 7.15%. For a Portland, Maine remote worker earning $120,000: Maine income tax approximately $8,200–$8,600 vs New Hampshire: $0 (wages) + $0 (capital gains) = $0. Annual savings by moving to Portsmouth NH: approximately $8,200–$8,600/year.
New Hampshire's effective property tax rate (~1.89%) is actually higher than Maine's (~1.36%). Moving from Portland, Maine to Portsmouth, NH may increase property tax while eliminating income tax. The net benefit depends heavily on the property value and income level. For a $500,000 home: Maine property tax ~$6,800 vs NH ~$9,450 — Maine is actually cheaper on property. The income tax savings (above ~$70,000 income) typically outweigh the property tax increase for professional earners.
Maine is not particularly retirement-friendly. Social Security is taxed above low thresholds. Pension and IRA income is taxed at regular Maine rates with no specific exemption beyond the standard deduction. Military retirement: only $10,000 exempt. For a Maine retiree with $70,000 in combined retirement income, Maine income tax is approximately $3,500–$4,500. New Hampshire: $0. Florida: $0 and property tax ~60% lower than Maine.
Maine uses standard domicile-based residency:
Maine defines a resident as someone domiciled in Maine, or a non-domiciliary who maintains a permanent place of abode in Maine and is present for more than 183 days during the tax year. To exit Maine residency: establish domicile in the new state (driver's license, voter registration, primary home), change vehicle registration, update estate documents. Maine does not have an aggressive post-departure audit reputation.
In your departure year, file Maine Form 1040ME (part-year resident return) covering income earned during Maine residency. Maine-source income after departure (Maine rental property, Maine business income) remains taxable as non-resident income. Maine's Homestead Exemption ($25,000 assessed value reduction) is available only for owner-occupied primary residences — if you move out of Maine but retain Maine property, you lose the Homestead Exemption on that property (it becomes non-primary-residence).
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Maine Tax Help for US Expats →Yes — Maine taxes pension income (private and government pensions, IRA distributions, 401(k) distributions) as ordinary income at regular Maine rates (up to 7.15%). Maine provides no general pension income exemption comparable to states like Illinois, Mississippi, or Pennsylvania. The only notable exception is the partial military retirement deduction (up to $10,000). Federal government civil service pensions (CSRS and FERS) are taxed as ordinary income in Maine with no specific state exemption. For Maine residents considering retirement, this makes Maine less favorable than many neighboring and southern states. New Hampshire residents pay zero state income tax on all retirement income sources — a compelling comparison for Maine retirees within commuting distance of the NH border.
Maine residents who spend winters in Florida (a common pattern) face Maine residency questions. Maine's 183-day rule means that if you are present in Maine for more than 183 days in a tax year while maintaining a permanent place of abode in Maine, you are a Maine resident for tax purposes regardless of where else you spend time. If you sell your Maine home and establish Florida domicile (driver's license, voter registration, Florida home), spending less than 183 days in Maine, you can exit Maine residency. However, retaining a Maine summer home while establishing Florida domicile requires careful documentation that Florida — not Maine — is your true domicile. Maine does audit cases where significant Maine presence is combined with claimed out-of-state domicile, particularly for high-income individuals.
Massachusetts has a 5% flat income tax rate (with a surtax of 4% on income above $1,000,000 — the 'Millionaires Tax' enacted 2023). Maine's top rate of 7.15% exceeds Massachusetts's standard 5% rate significantly. For a Maine resident earning $80,000: Maine income tax approximately $4,900. Massachusetts income tax: $4,000. Maine is more expensive than Massachusetts for middle-to-upper-middle earners. For income above $1,000,000: Massachusetts's 9% effective rate (5% + 4% surtax) exceeds Maine's 7.15%. Property taxes: Massachusetts (~1.2%) is slightly lower than Maine (~1.36%). Overall, Maine is a higher-tax state than Massachusetts for most income levels below $1,000,000, despite having lower name recognition as a high-tax state.