Key figures
Maine payables
2026, with sources
1099s and backup withholding
Maine is in the IRS Combined Federal/State Filing program, but MRS sets its own rule: any payer required to file any type of 1099 electronically with the IRS must also file those forms directly with MRS for Maine residents and recipients of Maine-source payments, through the Maine Tax Portal’s upload. MRS doesn’t accept paper copies, and failing to file or furnish a statement carries a $50 fine per failure.
When federal backup withholding applies to a payee, Maine requires its own withholding at a flat 5%, reported on the quarterly Form 941ME. A startup that pays a Maine contractor who never returned a W-9 withholds both.
Use tax
Purchases for use in Maine are subject to use tax at 5.5% when the seller hasn’t charged Maine sales tax, reported directly to MRS. Maine’s Business Guide lists office equipment, computer hardware and software among the items a business commonly owes use tax on.
For example, a Bangor company that buys $40,000 of laptops from an out-of-state reseller that doesn’t collect Maine tax owes $2,200 of use tax. Maine’s treatment of remotely accessed software is narrower than its treatment of downloaded software, so the AP process should distinguish the two.
Deadlines
- With the federal filingMaine copies through the Maine Tax Portal, if you e-file with the IRSForms 1099
The federal baseline
This page covers what Maine adds. The federal rules underneath it apply here too.
Common questions
Do we send our 1099-NECs to Maine?
If you’re required to e-file them with the IRS, yes: MRS says any payer required to electronically file any type of 1099 with the IRS must file those forms directly with MRS for Maine residents and payees with Maine-source payments, through the Maine Tax Portal. Paper copies are not accepted.
What do we owe on equipment and software bought out of state?
Use tax at 5.5%, reported directly to MRS. The Business Guide lists computer hardware and software among the common taxable purchases for a business when the seller didn’t charge Maine tax. Whether a remotely accessed SaaS subscription is taxable depends on whether a product is transferred; confirm specific services with MRS.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- The closeWhy startups should close their books every monthA monthly close turns a bank balance into numbers an investor, an auditor or a 409A firm will accept. What it is, and why it gets expensive to skip.
More of the Maine guide
- AccountingAccounting and state tax in MaineCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in MaineSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayrollPayroll taxes and employer rules in MaineWithholding, unemployment insurance, paid leave, minimum wage and the rules on paydays
- ComplianceCompliance and filings in MaineRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in MaineCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Maine Revenue Services — 2026 Form 941ME instructions
- IRS Publication 1220 — Combined Federal/State Filing participating states
- Maine Revenue Services — 2026 withholding tables and instructions
- Maine Revenue Services — Sales and use tax rates and due dates
- Maine Revenue Services — Business guide for sales, use and service provider tax (Dec 2025)
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.