Maine LLC Taxes
Maine LLCs are taxed as pass-through entities by default. That means the LLC itself does not pay taxes, but instead passes its revenues and losses on to its members, who pay the state’s graduated personal income tax rate. Members of an LLC are taxed at the 15.3% federal self-employment tax rate (12.4% for social security and 2.9% for Medicare) and pay a state personal income tax rate between 5.8%-7.15%. For LLCs that have C-corp tax election, they’ll have to pay the state’s corporate income tax rate. Here’s what you need to know about Maine LLC taxes.
In this article, we’ll cover:
How Are Maine LLCs Taxed?
Maine LLCs with only one member are treated as single-member LLCs (SMLLC) and file taxes as sole proprietorships. If your LLC has multiple members, you’ll file as a multi-member LLC with partnership status. These are the tax forms that LLCs with default status need to file:
- Single-member LLC—Form 1040 (usually Schedule C, but some SMLLCsfile C-EZ, E, or F)
- Multi-member LLC—Form 1065
Maine LLCs taxed as S-corp
LLCs taxed as S-corps avoid paying the 15.3% self-employment tax LLCs normally pay on dividends, though will still have to pay it on salaries. With S-corp status, your LLC still keeps its pass-through status. LLCs are able to apply for S-corp tax status by filing Form 2553 with the IRS. S-corp status is a tax election available to both LLCs and corporations that meet IRS S-corp requirements, such as having only one class of stock. Be sure to consult with a CPA before changing your LLC’s tax status.
LLCs taxed as C-corp
A C-corporation is the default tax election for corporations, but LLCs are able to choose C-corp status. Before you make the leap, consult with a tax professional or accountant. Investors find LLCs with C-corp status more attractive, but you will have to pay both the 21% federal corporate income tax and Maine’s graduated corporate income tax that ranges between 3.5% and 8.93%. To file your taxes with the IRS as a C-corp, you’ll need to submit Form 1120. C-corp LLCs also don’t pay the federal self-employment tax.
Maine State Income Tax
As an LLC owner filing under default status, you’ll pay the Maine individual income tax rate. Maine’s individual income tax rate is graduated with rates ranging from 5.8% to 7.15%. Maine also has a graduated corporate income tax filing that extends to entities filing as corporations based on their net income during the year. Here are the rates:
|Maine Corporate Tax Rate||Taxable Income|
|$12,250 plus 7.93%||$350,000-$1,050,000|
|$67,760 plus 8.33%||$1,050,000-$3,500,000|
|$271,845 plus 8.93%||any excess over $3,500,000|
Sales, Use, and Service Provider Tax
In Maine, you’ll need to collect a Sales, Use, and Service Provider Tax. Maine’s tax rates are:
- General Sales: 5.5%
- Use Tax: 5.5%
- Service Provider Tax: 6%
Local Maine Taxes
If your business owns property, you’ll owe property taxes at the local level. To figure out your property tax rate, contact the department in charge of property taxes in your local jurisdiction. Maine does not require LLCs to pay a local use or sales tax.
Other Taxes in Maine
If your LLC has employees, you’ll need to consider the employer taxes you’ll need to pay. Here are some other Maine LLC taxes that may affect your business:
Maine State Employer Taxes
Most employers in Maine require workers’ compensation coverage and unemployment benefits. Sole proprietors with no employees, LLC owners, and anyone who owns at least 20% of a corporation aren’t required to cover themselves under workers’ compensation insurance, though.
- Unemployment Premium (UI) Tax—As of 2022, the tax rate for unemployment insurance in Maine is 2.45%.
- Workers’ Compensation—Most Maine employers are required to purchase workers’ compensation insurance for their employees. To get workers’ compensation insurance, you’ll need to sign up with a private insurer or request to be a self-insured employer. Your rates will depend on factors like location, risk of injury, and number of employees.
To learn more about Maine employer taxes, visit the Maine Department of Labor website.
Maine levies a tax on certain industries, meaning your LLC may need to pay additional fees. Some of the taxes include:
- Cannabis Excise Tax
- Blueberry Tax
- Cigarette Tax
- Fuel Tax
Find more information on industry taxes on the Maine Department of Revenue’s Business Taxes page.
Do foreign LLCs in Maine need to pay Maine taxes?
Yes. Maine foreign LLCs are taxed the same as domestic LLCs, meaning the LLC’s members will pay taxes on the business’s revenue and losses unless they elect C-corp filing. You will also have to pay state and local taxes if you set up a physical location in Maine. Your LLC is viewed as a foreign LLC if it was originally formed in another state and registered with the Maine Secretary of State to do business in the state.