Capital gains tax in Maine (2026): selling a business, real estate or farm
Maine's 2026 surcharge turns a big sale year into a 9.15% year
Starting with tax years beginning on or after Jan. 1, 2026, Maine adds a surcharge of 2% on the portion of Maine taxable income above $1,500,000 for married couples filing jointly and heads of household, $1,000,000 for single filers and $750,000 for married filing separately (Maine Revenue Services 2026 rate schedule, Note 1). From 2027 those dollar lines are indexed for inflation. Because the surcharge is measured on taxable income, not on gains alone, it lands squarely on the year a business, farm or building is sold.
Below the surcharge, Maine's joint brackets for 2026 are 5.8%, 6.75% and 7.15%, with 7.15% starting at $129,750. Maine has no lower rate for long-term gains. Federal long-term rates, 0%, 15% and 20% with 20% above $613,700 of joint taxable income for 2026 (Rev. Proc. 2025-32), are covered in the capital gains guide.
The surcharge in dollars, and how timing changes it
The first example puts a $4 million gain into one 2026 return. Maine tax caused by the sale is $339,000, on top of $798,865 of federal income tax and $148,200 of net investment income tax, for $1,286,065 in all. The second example receives the same gain in four equal annual pieces. Each year's Maine taxable income stays below $1.5 million, so the surcharge never applies and Maine tax falls to $286,000. Across all three taxes the spread saves $135,613.
That is why the Section 453 installment sale has a sharper edge in Maine than in most states: it can keep each year under a fixed line. Sellers already near the line can also look at year-end timing, a December versus January closing, or a charitable remainder trust that releases gain over many years. If more than $5 million of installment notes are outstanding at year end, the federal Section 453A interest charge enters the math (IRC 453A).
Selling Maine property as a nonresident
Maine requires every buyer of Maine real property to withhold 2.5% of the total consideration from a nonresident individual, estate or business seller when the price is $100,000 or more, and remit it with Form REW-1 (36 M.R.S. 5250-A; MRS real estate withholding FAQ, 2026). Summer-home owners from Massachusetts or New York who sell a camp or cottage meet this at closing.
- The withholding can be reduced to your maximum Maine tax on the gain: 7.15% of the gain plus 2% of any gain above the $1.5 million joint or $1 million single line for 2026.
- On an installment sale, withholding may be based on the first-year gain, and you then file Maine returns and pay estimates each year until the contract is paid. Since 2019 a nonresident may instead elect to report the whole gain in the year of sale.
- Withholding applies even to a 1031 exchange, but Form REW-5 with the exchange agreement can exempt it, and Maine follows the federal deferral.
The transfer tax, and the new rate above $1 million
Maine's real estate transfer tax is $2.20 per $500 of value, imposed half on the grantor and half on the grantee. For deeds effective Nov. 1, 2025 and later, an additional $3.80 per $500 applies to value above $1,000,000 (36 M.R.S. 4641-A, PL 2025, c. 388). The same rates reach a sale of a controlling interest in an entity that owns Maine real estate, so selling the LLC instead of the land does not avoid it. Settle in the contract who pays the high-value portion.
Depreciation add-backs and Maine businesses
Maine requires business owners to add back federal bonus depreciation under Section 168(k) and recover it through later subtractions (36 M.R.S. 5122). When the property is sold, the gain in federal adjusted gross income is adjusted for Maine by any add-back not yet recovered, so the Maine gain on equipment or improvements can be smaller than the federal one. Ask your preparer for the Maine depreciation carryforward before you set the price. For the federal side of a company sale see capital gains tax on the sale of a business and purchase price allocation.
Heirs, farms, woodland and leaving Maine
Maine keeps an estate tax with a $7,160,000 exclusion for 2026 deaths (Maine Revenue Services). Large estates holding appreciated land face that tax, while heirs receive a federal basis step-up that erases built-in gain; compare holding until death with a lifetime sale. Farm and woodland sellers get no special Maine rate, so read capital gains tax on farmland and timber sale taxes for the federal rules.
Moving out before a sale removes Maine tax on stock and other intangibles but not on Maine real estate, which stays Maine-source; see moving before a sale and the New Hampshire page.
Hans studies the tax side of Maine sales and models the surcharge year by year. Get the Big Sale Tax Analysis.
What to know
The engine applies Maine's 7.15% top rate and the 2026 surcharge; it does not index the surcharge line after 2026, which matters only if later installment years approach the line. Keeping each year under the line works only if the buyer actually pays on schedule, so an installment note puts the buyer's credit in your hands until it is paid; secure it with a mortgage, a real down payment and personal guarantees. Nonresident withholding is a prepayment, not the final tax.
Worked example
Maine couple, $150,000 of other income, sells a coastal commercial property or business for a $4,000,000 long-term gain, all reported in 2026. Same couple and gain, sold on a note so $1,000,000 of gain is reported each year 2026 to 2029; each year's Maine taxable income stays under the surcharge line. Later years use projected federal tables.
| Engine run | One-year sale, $4M gain | Same gain, four equal installments |
|---|---|---|
| Filing status | Married, joint | Married, joint |
| State | Maine | Maine |
| Tax years | 1 | 4 |
| Other income (wages, pension, interest) per year | $150,000 | $150,000 |
| Long-term capital gain | $4,000,000 | $4,000,000 |
| Federal income tax on the sale | $798,865 | $727,652 |
| Net investment income tax (3.8%) | $148,200 | $136,800 |
| State income tax on the sale | $339,000 | $286,000 |
| Total tax caused by the sale | $1,286,065 | $1,150,452 |
| Effective rate on the gain | 32.2% | 28.8% |
| Gain kept after these taxes | $2,713,935 | $2,849,548 |
Computed October 7, 2026 by the Big Sale Tax engine (engine.js yearTax): federal brackets, 0/15/20% thresholds and AMT from Rev. Proc. 2025-32 (OBBBA-adjusted) and the One Big Beautiful Bill Act (P.L. 119-21); NIIT under IRC 1411 (thresholds not indexed); state tax from the engine's state table. "Tax caused by the sale" = tax with the sale minus tax without it. Excludes selling costs, local taxes and estimated-tax timing. Education only.
Run your own numbers
2026 law from the engine: federal 0/15/20% brackets (Rev. Proc. 2025-32), 25% cap on unrecaptured 1250 gain, ordinary rates on 1245 recapture, 3.8% NIIT over $200,000 single / $250,000 joint (IRC 1411), AMT, and your state's rules. Tax shown is the tax caused by the sale. Excludes selling costs, local taxes and NIIT exceptions for active business owners. Education only.
Long-Term vs Short-Term Capital Gains (2026)
The one-year holding rule, the 2026 0/15/20% thresholds for every filing status, NIIT, recapture, the state layer and a worked $200,000 example: 11 months vs 13 months, and what spreading the gain can save.
Frequently asked questions
Does Maine tax capital gains?
What is the Maine capital gains tax rate for 2026?
Do Maine and the federal government tax long-term capital gains at the same rate?
Does my residency status change how Maine taxes my capital gains?
Does Maine have capital gains tax on real estate?
When should I consult a professional about Maine capital gains taxes?
Sources
- Maine Revenue Services 2026 individual rate schedule (rev. May 20, 2026)
- MRS real estate withholding FAQ
- 36 M.R.S. 5250-A (real estate withholding)
- 36 M.R.S. 4641-A (transfer tax)
- 36 M.R.S. 5122 (Maine modifications)
- MRS estate tax (706ME)
- Rev. Proc. 2025-32 (2026 federal brackets)
Figures as of October 7, 2026; each rate and limit above names its source and year. Education only, not legal or tax advice.
Keep reading
Sale of a business
Why one price becomes seven tax buckets, which pieces are ordinary income, and what an active owner can keep out of the 3.8% NIIT.
ReadCommercial property
Office, retail and industrial sales: why cost segregation comes back at ordinary rates, how the 1231 lookback works, and what states hold back at closing.
ReadSecond home
A vacation home gets no Section 121 exclusion, but rental history, a 1031 safe harbor or moving in can change the bill.
ReadNew Hampshire
No individual income tax on gains and the interest and dividends tax is gone, but the Business Profits Tax reaches gain inside a business, even a sole proprieto
ReadMassachusetts
Three gain rates, a 4% surtax that only bites in the big year, and a separate state installment election once the gain hits $1 million.
ReadInstallment sale (Section 453)
Report the gain as the buyer pays you instead of all in the year of sale, under rules that have been in the tax code for decades.
ReadKnow your number before you sign.
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