Maine — No Pass-Through Entity Tax (PTET) — Maine has not adopted an elective pass-through entity tax; pass-through income is taxed to the partners and shareholders, with nonresident withholding on Form 941P-ME

# Summary

Maine has not adopted an elective pass-through entity tax (PTET). There is no Maine entity-level income tax that a partnership, S corporation, or LLC may elect to pay in place of its owners' Maine income tax, and therefore no PTET rate, no election, and no election deadline exist. Maine taxes pass-through income at the owner level: under 36 M.R.S. § 5190 the entity itself is not taxable, and §§ 5191 and 5192 bring each resident and nonresident partner's distributive share into that partner's own Maine adjusted gross income. What a Maine pass-through entity does file is a withholding and information return, Form 941P-ME, plus an optional composite return, Form 1040C-ME, for nonresident owners. Note for practitioners: several widely circulated commentary articles state that Maine enacted a PTET effective January 1, 2026. That is incorrect — the bill that would have done so was not enacted, as described below.

# Maine Revenue Services' own statement of the regime

In January 2025 the Office of Tax Policy at Maine Revenue Services delivered a report to the Legislature's Joint Standing Committee on Taxation titled "Study on the Adoption of a Pass-Through Entity Income Tax," prepared pursuant to Resolve 2023, c. 170. The report describes Maine's existing regime and treats a Maine PTE tax as hypothetical throughout. Its opening states that the Office "examined and evaluated the State's current system of taxation of business income, focusing on the current system of taxing pass-through business income at the partner or shareholder level, the federal limitation on the federal income tax deduction for state and local taxes, and the possible adoption of a pass-through entity income tax to work around the limitation." The revenue analysis is framed conditionally — "If Maine were to enact some form of PTE tax similar to those reviewed in this Report..." — and the report counts the states that have acted: "Currently, and despite a lack of additional IRS guidance or regulations addressing the matter, 36 states have enacted PTE tax legislation, including 7 states that enacted workarounds in 2023 - the last year in which states have enacted such taxes." Maine is not among them. The Department's own current-year forms page, Pass-through Entity Taxes - 2026, lists only Form 941P-ME, the 901ES-ME payment vouchers, Form 1040C-ME and the Partnership Audit Return; there is no entity-level election form.

# The legislative record through 2026

The MRS study establishes the position as of January 31, 2025. The legislative record carries it forward. LD 191 (HP 124) of the 132nd Legislature, "An Act to Support Maine Businesses by Establishing a Pass-through Entity Tax and Tax Credit," would have created the elective tax together with a credit for owners. Its final recorded action is "Died On Adjournment, Apr. 29, 2026." The bill was not enacted, so no Maine PTET exists for tax years 2025 or 2026. Widely circulated advisory commentary describing a Maine PTET as effective for tax years beginning on or after January 1, 2026 appears to have been written from this proposal and not corrected after it died; it should not be relied on.

# What Maine imposes instead

Maine reaches pass-through income through the owners, backed by entity-level withholding. Under 36 M.R.S. § 5190 the entity is not itself taxable; § 5191 includes a resident partner's distributive share in that partner's Maine adjusted gross income, and § 5192 does the same for a nonresident partner's Maine-source share. A pass-through entity treated as a partnership or S corporation for federal purposes that transacts business in Maine or realizes Maine-source income, and that had at least one nonresident member during the reporting period, files Form 941P-ME. It must withhold 7.15% of the estimated Maine-source distributive income of each nonresident member, except that 8.93% applies where the nonresident member is a C corporation. The 2025 Form 941P-ME is due March 16, 2026, and a federal extension for Form 1065 or 1120-S automatically extends the Maine filing for an equivalent period, generally up to six months and no longer than eight — though withholding payment due dates are not extended. A member may be exempted from withholding by joining a composite return on Form 1040C-ME, or through the compliant-taxpayer exemption; exempt members are listed on Schedule 3P. Composite filing is governed by 18-125 C.M.R. ch. 805 and withholding reporting by ch. 803. None of these is an entity-level tax: the members remain the taxpayers, and withholding is a prepayment credited against their own Maine liability.

# Consequence for owners electing into another state's PTET

Because Maine has no PTE tax of its own, a Maine resident who owns an interest in a pass-through entity that elects into another state's PTET faces a specific disadvantage that the MRS study identifies. The report states that "Under current law Maine does not allow resident owners a credit for taxes paid to other jurisdictions by the PTE, significantly reducing the utility of other state PTE taxes for Maine resident owners of PTEs electing into those out-of-state PTE taxes." In other words, the entity-level tax paid to the other state is paid by the entity rather than by the Maine resident, and Maine's credit for taxes paid to another jurisdiction does not reach it. The study flags this as an area for legislative attention, but it remains the law absent an enactment.