Maine Joins States Pursuing Wealth Tax

BY JEANNE WHALEN

Maine has one of the nation’s smaller economies, rooted in timber, lobster, manufacturing and tourism.

But it also has growing pockets of wealth, which have caught the attention of state bean counters. Maine this month joined a list of blue states exploring or adopting new taxes on the highest earners, enacting a 2% surcharge on annual income over $1 million.

The new levy shows wealth taxes aren’t just for states groaning with tech founders and hedge-fund billionaires. Even small or midsize economies see opportunity to raise revenue through new incometax levies on top earners.

These Democratic-led states say the revenue is badly needed to fund state services in the wake of federal cuts to healthcare and food assistance from President Trump’s tax and spending bill. Republicans and state chambers of commerce generally oppose the taxes, warning that they will undermine entrepreneurship and potentially lower state revenue by driving away well-off residents.

Washington state’s governor last month signed a similar millionaires tax into law, saying it was necessary to “rebalance an unfair system.” Massachusetts voters in 2022 approved a 4% surtax on annual income over $1 million. Revenue from the levy rose to nearly $3 billion during the 2025 fiscal year, from $2.46 billion a year earlier.

New York City Mayor Zohran Mamdani won his election on a platform to tax the rich. And hikes on top earners are a priority for some Democrats and progressives before elections this fall in Rhode Island and Colorado.

The millionaire class has been on a steady climb in Maine, as it has in many other states, alongside the postpandemic stock-market boom. Maine has about 2,600 tax filers with income over $1 million, up about 15% from 2024, according to state officials.

Maine’s 2% surcharge boosts the rate on income over $1 million to 9.15%, and is expected to raise about $150 million over two years. Gov. Janet Mills, a Democrat running for U.S. Senate, said in a statement that the tax was needed for investments in healthcare, education and other services, “especially as we face such economic uncertainty because of actions of the Trump administration.”

Part of the revenue will be used to provide property-tax relief for some residents, Mills said. The revenue will also support a budget that provides free community college and invests in housing, she added.

Maine enjoyed solid economic growth until 2025, when it had one of the slowest growing GDPs in the nation. The state’s tourism industry took a big hit from the plummeting number of Canadian visitors, who boycotted U.S. travel to protest Trump’s tariffs and threats to annex Canada, according to Garrett Martin, president of the Maine Center for Economic Policy.