Maine — No Minimum Corporate Income Tax (general business corporations) — Maine imposes no minimum or fixed-dollar corporate income tax on general business corporations; the 1120B-ME franchise tax reaches financial institutions only

# Summary

Maine imposes no minimum corporate income tax on general business corporations; the franchise tax reported on Form 1120B-ME applies only to financial institutions. A general C corporation filing Form 1120ME owes tax computed solely on its Maine taxable income under the graduated rates of 36 M.R.S. § 5200(1-A), with no minimum payment, no fixed-dollar floor and no capital- or asset-based alternative — a corporation with no Maine taxable income owes no Maine corporate income tax, though it may still have a return-filing obligation. Maine does levy a corporate income tax; what it does not levy is a minimum or franchise-style charge on general business corporations.

# No minimum or fixed-dollar tax under Form 1120ME

For tax years beginning on or after January 1, 2018, 36 M.R.S. § 5200(1-A) imposes the corporate income tax at graduated rates on income alone: 3.5% of income not over $350,000; $12,250 plus 7.93% of the excess over $350,000 up to $1,050,000; $67,760 plus 8.33% of the excess over $1,050,000 up to $3,500,000; and $271,845 plus 8.93% of the excess over $3,500,000. Nothing in the section prescribes a floor. Maine's separate minimum-tax provisions have all been withdrawn: 36 M.R.S. § 5203 ("Minimum tax for tax preferences"), § 5203-A ("State minimum tax") and § 5203-B ("Corporate income tax surcharge") are each repealed, and the surviving state alternative minimum tax at § 5203-C expressly stops at the corporate door: subsection (2)(C) provides that "[t]he tax imposed by this subsection does not apply to taxable corporations for tax years beginning on or after January 1, 2018." For TY2025 there is accordingly no minimum corporate income tax, no alternative minimum tax and no corporate surcharge applicable to a general business corporation.

# The 1120B-ME franchise tax reaches financial institutions only

The Maine franchise tax is imposed by chapter 819 and reported on Form 1120B-ME. Under 36 M.R.S. § 5206 it is levied "upon the franchise or privilege of doing business in this State of every financial institution that has Maine net income or Maine assets and that has a substantial physical presence in this State." The measure is either 1% of the institution's Maine net income plus 8 cents per $1,000 of its Maine assets, or 39 cents per $1,000 of Maine assets alone, at the institution's election. The reach of the tax follows the character of the business rather than its legal form — a financial institution is subject to it "even if it is treated as a partnership, S corporation or entity disregarded as separate from its owner for federal income tax purposes." A general business corporation that is not a financial institution is outside chapter 819 entirely and files Form 1120ME, not Form 1120B-ME. Conversely, § 5203-C(2)(C) excluded financial institutions from the former state alternative minimum tax while it applied, so the two regimes have never overlapped.