Does Maine charge sales tax on services?
by October 4, 2023
The majority of U.S. states require merchants to charge sales tax on tangible personal property (TPP), otherwise known as physical goods. Many states also implement sales and use tax on digital goods and SaaS. Because the economy has shifted over time from a manufacturing economy to a service economy, states are now looking to generate revenue by taxing services.
Here’s what merchants need to know about taxing services in the state of Maine, which has a state sales tax rate of 5.5%.
Does Maine charge sales tax on services?
Services in Maine are generally not taxable, but there are a few exceptions. In addition, Maine has a service provider tax, which is imposed at a rate of 6%. Here are some examples of taxable services in Maine:
- Lodging rentals in a hotel, rooming house, tourist or trailer camp
- Car rentals or leases, including trucks or vans with a gross weight of less than 26,000 pounds
- Prepaid calling services
- Electricity transmission and distribution
- Extended service contracts on vehicles
Services subject to service provider tax include:
- Cable and satellite television or radio services
- Fabrication services
- Rental of video media and video equipment
- Rental of furniture, audio media and audio equipment pursuant to a rental-purchase agreement
- Telecommunications services
- Installation, maintenance or repair of telecommunications equipment
- Private nonmedical institution services (exempt after 2024)
- Community support services for persons with mental health diagnoses (exempt after 2024)
- Community support services for persons with intellectual disabilities or autism (exempt after 2024)
- Home support services (exempt after 2024)
- Ancillary services
- Group residential services for persons with brain injuries (exempt after 2024)
Please keep in mind that this is a guideline, and you should consult with a sales tax professional to determine if the services your business provides should be subject to state sales tax. For an in-depth look at Maine sales tax, TaxJar’s guide to sales tax in Maine and the Maine Revenue Services has more details.
How to stay compliant with sales tax when you sell services
Managing all the moving parts of sales tax can be challenging. Are accounting services taxed? What about hair care or car maintenance? They may not be taxed in your state today, but sales tax laws change all the time. TaxJar makes it easier for you to stay current with it all, especially as you scale your business across states.
If you need to charge sales tax on services, TaxJar takes all of these state laws into account and makes your job simple. To learn more about TaxJar and get started automating your sales tax compliance, start a free, 30-day trial today.
