Updated October 5, 2026. Quick answer: Yes. Maine taxes interest and dividends as part of Maine taxable income on three rates, “5.8% of Maine taxable income” at the bottom and 7.15% at the top for 2025. Interest on U.S. obligations is subtracted and bonds of other states are added back.
How Maine treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed on the graduated schedule |
| 2025 rates (single) | 5.8% below $26,800, “6.75% of excess over $26,800” to $63,450, and “$4,028 plus 7.15% of excess over $63,450” |
| Joint filers | The breakpoints are $53,600 and $126,900 |
| Other states’ bonds | Schedule 1A: “Enter the income from municipal and state bonds, other than Maine”, and “enter bond interest from City of New York but not Portland, Maine” |
| U.S. obligations | Schedule 1S subtracts “income from direct obligations of the U.S. Government, such as Series EE” |
| Maine bonds | Line 18 subtracts “Interest from Maine Municipal General Obligation Bonds, Private Activity Bonds” and Maine airport authority bonds |
| Mutual funds | No mutual fund pass-through rule was found in the archived instructions |
A $20,000 example
Taxable dividends and interest of $20,000 taxed wholly at 5.8% would add $20,000 x 5.8% = $1,160; taxed wholly at 7.15%, $20,000 x 7.15% = $1,430. Which rate applies depends on your total taxable income.
What changes in 2026
The schedule is for tax years beginning in 2025 and prints no 2026 rate change; its dollar breakpoints are indexed for inflation each year.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether Maine taxes capital gains, whether Maine taxes pensions, how Maine taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- 2025 Maine Individual Income Tax Rates: https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/rate_sched_2025.pdf
- 2025 Form 1040ME Instructions: https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/instr_2025.pdf
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.