Withholding Taxes: Maine

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Residents of Maine are subject to income tax withholding on income earned in Maine. If a resident works in another state for a Maine employer, the employer must withhold Maine tax on all of the employee's wages, less the amount withheld for the other state. Income earned in Maine by a nonresident is taxed in Maine if certain conditions are met. See Withholding on Residents, Nonresidents and Expatriates.
• In order for an employer to withhold the correct Maine income tax from employees' wages, each employee must complete Form W-4ME, Maine Employee's Withholding Allowance Certificate, when hired. Military spouses may be exempt from withholding if certain conditions are satisfied. Employers are required to submit Forms W-4ME to Maine Revenue Services under certain circumstances. See Employer's Withholding Allowance Certificate.
• Withholding on supplemental wage payments, such as bonuses, commissions and overtime pay, is calculated differently depending on whether the payments are made with, or separate from, regular wages. See Supplemental Wages.
• Maine employers that are required to withhold income tax from employee's wages are required to maintain any records needed for the reasonable administration of the withholding rules. See Recordkeeping Requirements.