If you own or operate a business in Maine, staying compliant with sales tax requirements is an important part of keeping your business running smoothly. No matter if you sell products, provide taxable services, or operate seasonally. Understanding how and when to file your Maine sales tax return helps you avoid unnecessary penalties and stay in good standing with Maine Revenue Services (MRS). This guide covers the essentials, from determining your filing frequency to reporting exempt sales and submitting your payment, so you can confidently manage your sales tax obligations.
What is the Maine sales tax rate?
Maine’s statewide sales tax rate is 5.5%, and unlike many other states, there are no additional local or county sales taxes. That makes it simpler for business owners, whether you’re running a shop in Portland, a café in Bangor, or a service business in Augusta, to know exactly what rate applies across the board.
However, not everything in Maine is taxed at that same 5.5% rate. Certain goods and services have special rates that business owners need to be aware of:
- Prepared food and alcoholic beverages are taxed at 8%.
- Lodging and short-term rentals, such as hotels, inns, and camps, are taxed at 9%.
- Short-term auto rentals are taxed at 10%.
So, while most sales will fall under the 5.5% rate, if you’re in the restaurant, hospitality, or rental industry, make sure you’re charging the correct rate. For the latest sales tax rate, visit the Maine Revenue Service’s website.
How to calculate Maine sales tax?
Calculating sales tax in Maine is simple since the state uses a single base rate. To find out how much sales tax to charge, simply multiply your total taxable sale by the correct sales tax rate.
For example, if you own a retail shop and sell a $200 item, you’d calculate:
$200 × 0.055 = $11
That means the total amount you’d collect from your customer is $211.
If you operate in industries with higher rates, such as a restaurant, bar, or lodging business, you’ll need to use the applicable rate (8%, 9%, or 10%) instead. For instance, a $100 restaurant bill taxed at 8% would add $8 in tax for a total of $108.
Keeping track of which rate applies to your specific sales ensures you stay compliant and avoid costly mistakes.
Use our sales tax calculator
Use our reverse sales tax calculator, perfect if you want to charge a nice, round number that already includes sales tax. For example, if you want to price a muffin and coffee at $6 even, you can enter that total into the calculator, and it will tell you the pretax amount you should charge so that after sales tax, your customer still pays exactly $6.
What does Maine charge sales tax on?
Maine’s sales tax applies to most tangible goods and a range of taxable services. This includes common retail items such as electronics, furniture, and household goods. The state also taxes certain prepared food and beverage sales, making it especially important for restaurants and convenience stores to stay on top of tax rules. In addition, lodging, short-term rentals, and specific services, like telecommunications, are subject to Maine’s sales tax.
Maine sales tax on food
Most grocery staples meant for home preparation and consumption are exempt from Maine sales tax. However, prepared foods and alcoholic beverages are taxable at a higher rate of 8%. This includes restaurant meals, takeout, and beverages served for immediate consumption.
For restaurant owners, keeping up with sales tax on prepared food and drinks can quickly become time-consuming. DAVO by Avalara automatically sets aside the sales tax you collect daily, files your returns, and pays them on time, so you can focus on creating great food and serving your customers instead of worrying about deadlines or penalties.
Does Maine have sales tax on clothing
Yes. Unlike some neighboring states that exempt clothing purchases, Maine applies the standard 5.5% sales tax rate to apparel and footwear. Whether you operate a boutique, gift shop, or outdoor gear store, it’s important to include sales tax in your pricing and ensure it’s properly reported each filing period.
Are retailers exempt from sales tax in Maine?
No, retailers in Maine are generally not exempt from paying sales tax on goods or services they purchase. However, if you’re buying items for resale, you won’t pay sales tax at the time of purchase. The tax is instead collected from the final consumer.
To qualify for this exemption, retailers must provide their supplier with a valid Maine resale certificate. This certificate verifies that the goods are being purchased for resale in the regular course of business and helps ensure compliance with Maine sales tax law.
Maine sales tax exemptions
While most tangible goods and taxable services are subject to Maine’s 5.5% sales tax, a few key exemptions apply. Common examples include:
- Groceries and prescription medicines for human consumption
- Certain medical equipment and supplies used by healthcare providers or patients
- Sales to government agencies
- Sales to qualifying nonprofit organizations, such as charitable, religious, or educational institutions
- Purchases of machinery, equipment, and parts used for harvesting by commercial wood harvesters
- Items such as feed, fertilizer, and supplies used for the commercial production of agricultural crops
To make tax-exempt purchases, qualifying organizations must provide the seller with a valid exemption certificate issued by the Maine Revenue Services (MRS). Without this documentation, sellers are required to collect sales tax at the point of sale.
Businesses should also maintain copies of all exemption certificates in their records for audit purposes. To stay up-to-date on the latest exemption policies, refer to the MRS’s bulletin for the sales tax business guide.
Make your sales tax less taxing with DAVO.
How to manage tax-exempt sales in Maine?
If your business makes sales that are exempt from Maine sales tax, it’s important to handle them properly to stay compliant. Exempt sales may include:
- Sales of exempt property or services
- Sales for resale
- Sales to qualifying exempt organizations
- Sales delivered or shipped to locations outside Maine
- Certain adjustments to previously reported sales, such as canceled transactions, post-reporting exemptions, or applicable discounts
To qualify for the exemption, purchasers must provide a valid Maine Revenue Services exemption certificate, and retailers are responsible for collecting sales tax unless this documentation is presented. Except for government sales, failure to collect tax without a certificate could result in liability.
Retailers should report exempt sales on the exempt sales line of their sales tax or service provider tax return. Keeping thorough records of all exemption certificates and transactions is essential, both to accurately report exempt sales and to protect your business in case of an audit.
How to apply for Maine sales tax registration
If you’re doing business in Maine, certain sellers are required to register and collect sales tax. This includes:
- Any seller of tangible personal property or taxable services, whether wholesale or retail, with a business location in Maine.
- Sellers with a substantial physical presence in Maine, even without a Maine location.
- Retailers making sales or soliciting orders in Maine on behalf of an out-of-state principal.
- Individuals renting living quarters, including vacation homes, cottages, or condos, and operators of transient rental platforms or room remarketers.
- Businesses making leases or rentals of automobiles, camper trailers, or motor homes.
- Sellers making consignment sales or leasing tangible personal property located in Maine, even if they are out-of-state.
- Entities involved in electricity transmission and distribution, wine direct shipping, or selling products electronically into Maine.
- Marketplace facilitators with gross sales exceeding $100,000 in the previous or current calendar year.
If your sales or business activity meets any of these criteria, you must register before collecting sales tax.
You can apply online through the Maine Tax Portal (MTP) by selecting “Register a new business” in the business panel. After creating a username and password, you’ll have access for future filings. The revenue department has also put together an instructional video to guide you on how to register online.
Paper applications can also be submitted by mail or fax if preferred. You can mail your application to Taxpayer Assistance, P.O. Box 1057, Augusta, ME 04332-1057 or fax it to (207) 287-6975. For more information on how to register, visit the MRS’s sales tax FAQ page.
How to file Maine sales tax online?
Most businesses in Maine file their sales tax returns electronically through the Maine Tax Portal, which is the preferred method for accuracy and speed. Start by logging in with your username and password. If this is your first time logging in, you may be prompted to set up two-step verification via an authentication app, text, or email.
Once logged in, navigate to the “Summary” tab and select the appropriate tax type, such as “Sales and Use Tax,” then click “View and File Returns.” You’ll see a list of filing periods, click “File Now” for the period you’re ready to file.
Follow the on-screen prompts, clicking “Next” until you receive a confirmation message stating your return has been successfully filed. This message will include a confirmation number. If you owe tax, you’ll be prompted to select a payment method and schedule your payment during the filing process. Complete the steps to confirm your payment and receive a confirmation number or a printed check voucher, depending on your payment choice. For additional guidance, check out this instructional video.
Paper filing is also an option, but be sure to use the correct mailing address, apply sufficient postage, and consider certified mail to have proof of mailing. It’s best to mail your return before the actual deadline to avoid any late-filing issues.
How to pay Maine sales tax online?
Before you can pay, you must first file your return. If you’re filing electronically through the online tax portal, you’ll be asked whether you’d like to “make a payment right now.” Selecting “Yes” will prompt you to enter your payment information and schedule your payment on the next screen before completing the return.
If you select “No,” you can finish filing your return first. After completing the return, you’ll be prompted to print a payment voucher, which you can submit along with a check. This process ensures your payment is properly linked to your filed return, helping you stay compliant and avoid any late-payment issues.
When is Maine sales tax due?
Maine sales tax returns are generally due by the 15th of the month following the taxable period. Your filing frequency (monthly, seasonal, quarterly, semi-annually, or annually) is determined by your average tax liability:
- Monthly: Retailers with an average tax liability of $600 or more per month must file monthly.
- Quarterly: Retailers with an average tax liability of $100–$599 per month may file quarterly.
- Semi-annual: Retailers with an average tax liability of $50–$99 per year may file semi-annual returns.
- Annual: Retailers with an average tax liability of less than $50 per year may file annually.
Visit the Maine Revenue Services website for more details on the sales tax deadlines. As for compensation for filing and paying on time, Maine does not offer any type of sales tax discount. However, other states do. If you operate in other states besides Maine and want to learn which states offer a discount, visit our sales tax discount guide.
Maine sales tax late filing penalty
Missing a due date or underpaying your Maine sales tax can lead to penalties and interest, which can add up quickly. Here’s what you need to know to stay compliant:
Penalties
Maine law imposes several types of civil penalties for filing or payment issues:
- Failure to file a return: A penalty of $25 or 10% of the tax due, whichever is greater. If the return is still not filed within 60 days after receiving a formal demand, the penalty increases to $25 or 25% of the tax due.
- Failure to pay tax: A penalty of 1% per month on any unpaid tax, up to a maximum of 25%. If payment is not made within 10 days after receiving a demand for payment and no further review is available, an additional 25% penalty may apply.
- Negligence or fraud: Filing a false or negligent return can result in a penalty of $25 or 25% of the deficiency, whichever is greater. Fraudulent returns filed with the intent to evade tax may face a penalty of $75 or 75% of the deficiency, whichever is greater.
- Substantial understatement: If the understatement of tax exceeds 10% of the total tax due or $1,000, whichever is greater, a penalty of $5 or 1% per month of the underpayment applies, up to a maximum of $25 or 25% of the underpayment.
Interest
If you don’t pay your tax on time, interest will accrue on the unpaid balance until it’s fully paid. It’s important to note that filing extensions do not extend your payment deadline. Current and past interest rates are published on the Maine Revenue Services website.
It’s always best to stay current with your filings and payments to avoid these penalties and protect your business from unnecessary costs.
How DAVO can help with Maine sales tax
Managing sales tax in Maine doesn’t have to be complicated. DAVO by Avalara automatically sets aside your sales tax daily, files your return, and makes payments on your behalf, right on time, every time, guaranteed. Whether you’re running a café in Portland, a retail shop in Bangor, or a seasonal business along the coast, DAVO helps you stay compliant with Maine Revenue Services so you can focus on running your business, not worrying about due dates.
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Maine Revenue Services Information:
(207) 624-9693
