Maine Estate Tax: Top Estate Planning Strategies

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Paul Sundin, CPA

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Our high income clients in the Pine Tree state have many tax questions. Most of the questions involve business valuations and implementing planning strategies. But what about the Maine estate tax?

In this guide, we will cover the Maine estate tax and also discuss gift tax and inheritance tax. I know taxes can be a little boring, so we will make this as simple as possible. If you have a high net worth, stay tuned.

Maine Estate Tax FAQs

What About the Federal Estate Tax?

The federal estate tax is rather complex. It is often called the death tax. It requires filing tax form 706 which can be over 20 pages long. Make sure you coordinate this with your CPA. 

The first step when someone passes away is to get all the information possible regarding their assets. These assets might consist of real estate, brokerage accounts, cars, boats and other assets. 

Also, the executor will need to determine retirement accounts and insurance proceeds. Many people don’t realize that even though insurance is not taxable to the recipient, it could be taxable to the estate. 

Once the asset review is completed, the executor will be able to deduct mortgages and other liabilities of the decedent. This amount can further be reduced for funeral costs other expenses like legal fees and other professional costs. 

The estate tax is then calculated based on a tax rate of 40%. It is only applied to the amount over the lifetime exemption. There is some speculation that the rate will be increased to 45%.  

Maine Inheritance Tax & Gift Tax Rates

Thankfully, Maine does not have an inheritance tax. If you received an inheritance from an out of state decedent, the state laws in that state may apply. For example, Pennsylvania imposes an inheritance tax on anyone who receives an inheritance from a Pennsylvania resident who passes away in the state. This is true even if you live in another state.

Also, there is no gift tax in Maine. However, the federal gift tax rules still apply to gifts of more than $15,000.

Tax Structure

Maine has a variety of taxes. Here are the different taxes and the related rates:

  • Income tax rates from a low of 5.8% to 7.15%. Capital gains are taxed same as ordinary income.
  • Sales tax is 5.5% and local governments do not tack on a local tax.
  • The average property tax rate 1.23%. This approximates the national average rate.

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