Maine Tax on Capital Gains

Maine taxes capital gains as ordinary income, meaning they are fully integrated into the state’s progressive income tax system.

Unlike federal tax rules, Maine does not offer a lower, preferential rate for long-term capital gains.

As a result, both short-term and long-term gains are taxed using the same graduated state income tax brackets.

Maine Capital Gains Tax Overview

In Maine, capital gains from investments such as stocks, real estate, mutual funds, and business assets are included in taxable income and subject to state income tax.

The length of time an asset is held does not change how it is taxed at the state level.

How Maine Taxes Capital Gains

Maine begins with your federal adjusted gross income (AGI), which already includes capital gains. That amount is then taxed using Maine’s progressive income tax brackets.

Example: If you realize a $25,000 capital gain from selling stock, the full $25,000 is included in your Maine taxable income.

Maine Capital Gains Tax Rates

Maine’s income tax rates range from approximately 5.8% to a top rate of 7.15%, depending on filing status and total taxable income. Capital gains are taxed at these same rates.

Example: A taxpayer in the highest income bracket may pay up to 7.15% in Maine state tax on capital gains.

Short-Term vs. Long-Term Capital Gains

Maine does not distinguish between short-term and long-term capital gains. Gains from assets held for one year or less and assets held for more than one year receive identical tax treatment.

Example: Selling stock after six months and selling stock after five years results in the same Maine tax rate if total income is the same.

High-Income Capital Gains Impact

Because Maine uses a progressive tax system, higher-income taxpayers are more likely to see a larger portion of their capital gains taxed at the top rate.

For single filers with taxable income exceeding roughly $58,050 and joint filers exceeding about $116,100, the top 7.15% rate applies to income above those thresholds.

Example: Only the portion of your capital gains that falls into the highest bracket is taxed at 7.15%, while the remainder is taxed at lower rates 📊

No Preferential Capital Gains Rate

Unlike federal tax law, which may tax long-term capital gains at 0%, 15%, or 20%, Maine offers no reduced rate for long-term investments.

Example: A gain taxed at 15% federally may still be taxed at up to 7.15% by Maine.

Reporting Maine Capital Gains

Capital gains must be reported on the Maine individual income tax return, which is generally due by April 15. Federal Schedule D figures typically flow into Maine’s return through federal AGI.

Example: Capital gains reported on your federal return must be accurately reflected on your Maine state filing.

Important Planning Tip

Large capital gains can push taxpayers into higher income brackets in Maine. Reviewing income timing, deductions, and expected gains before selling major assets can help manage the state tax impact 💡

Electronic Filing Recommendation

💻Because Maine capital gains taxes depend heavily on income brackets and federal AGI, electronic filing is strongly recommended.

E-filing helps taxpayers:

• Accurately calculate tax across multiple income brackets
• Reduce errors when importing federal capital gains data
• Ensure proper reporting of high-income gains
• Speed up processing and refunds
• Maintain clean digital records for audits or future planning