Maine has made the following changes to the 2026 Tax Year.
Maine Income Tax Treatment for Mi'kmaq Nation Members
Beginning in 2026, tribal members of the Mi'kmaq Nation residing on Mi'kmaq Nation Trust Land receive the same Maine income and sales tax treatment as other recognized tribal members and tribal entities in Maine.
Higher Standard Deduction
Maine increased its standard deduction amounts for 2026:
- Single or Married Filing Separately: $15,700
- Head of Household: $23,550
- Married Filing Jointly or Qualifying Surviving Spouse: $31,400
Additional deductions for age and blindness continue to follow federal rules.
New 2% Income Tax Surcharge
A new 2% income tax surcharge applies to Maine taxable income exceeding:
- $1,000,000 for Single filers
- $750,000 for Married Filing Separately
- $1,500,000 for Head of Household, Married Filing Jointly, or Qualifying Surviving Spouse
Property Tax Fairness Credit Increased
For taxpayers under age 65, the maximum Property Tax Fairness Credit increased from $1,000 to $1,500.
The maximum credit for taxpayers 65 or older remains $2,000.
Pension Income Deduction Expanded
The definition of military retirement pay eligible for the Maine pension income deduction was expanded.
As of 2026, retirement pay from all U.S. uniformed services is fully exempt from Maine income tax, including:
- Army
- Navy
- Air Force
- Marines
- Coast Guard
- Space Force
- National Oceanic and Atmospheric Administration (NOAA)
- Public Health Service
Pass-Through Entity Tax (PTET) Program
Maine created a Pass-Through Entity Tax program effective for tax years beginning on or after January 1, 2026.
Key features include:
- Electing pass-through entities pay tax at 7.15%.
- Qualified members may claim a refundable credit equal to 90% of their share of the tax paid by the entity.
- Maine resident members may also qualify for a credit for substantially similar pass-through entity taxes paid to another state.
Certain Domestic Research or Experimental Expenditures
For tax years beginning in 2026, Maine requires an income addition modification for certain domestic research or experimental expenditures deducted for federal tax purposes under IRC Section 174A(a). Taxpayers may recapture these additions through subtraction modifications in future tax years.
Net Increase in the Federal Depreciation Deduction for Qualified Production Property
Maine requires an income addition modification equal to the net increase in depreciation attributable to the federal depreciation deduction claimed under IRC Section 168(n).
Generally, the special federal depreciation deduction applies to qualifying production property:
- Constructed after January 19, 2025, and before January 1, 2029
- Placed in service before January 1, 2031
The income addition modification may be recaptured in future tax years.
Gain From the Sale of Qualified Small Business Stock
Maine requires an income addition modification for gain excluded from federal gross income under IRC Section 1202(a)(1) related to the sale of qualified small business stock.
The provision applies to qualified small business stock:
- First acquired after July 4, 2025
- Held for at least three years
- Issued by a C corporation with assets not exceeding $75 million
Expanded Municipal Volunteer Program for Property Tax Assistance
The municipal property tax assistance program was expanded to include:
- Individuals age 60 and older
- Volunteer firefighters
- Volunteer municipal firefighters
- Volunteer emergency medical services personnel
Capital Gain on the Transfer of a Majority Interest in a Business or of a Qualified Property That Provides Housing
Maine expanded the income subtraction modification, up to $750,000, for capital gain on the transfer of a majority interest in a qualified business that provides housing.
The subtraction modification was also expanded to include gains from the sale of qualified housing property to:
- Cooperative affordable housing corporations
- Municipal housing authorities
- Affiliates of municipal housing authorities
Other limitations continue to apply.
Recapture of the Net Increase in the Federal Depreciation Deduction for Qualified Production Property
Taxpayers may recapture in future tax years amounts previously required to be added back under the qualified production property depreciation provision.
The recapture is based on the depreciation that would have been allowable under IRC Sections 167 and 168 if the taxpayer had not claimed the enhanced depreciation deduction under IRC Section 168(n).
Dirigo Business Incentives Tax Credit
Beginning August 1, 2026, a data center that begins operations on or after that date may not be certified as a qualified business for purposes of the Dirigo Business Incentives Tax Credit.
The restriction applies to facilities primarily engaged in data processing, data storage, cloud computing, or similar computing infrastructure services.
Employer Credit for Family and Medical Leave
The employer credit for family and medical leave is repealed for tax years beginning after 2025.