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S-corp election in Maine

In short

None in the normal case — no franchise tax, no minimum tax, no annual entity fee. Maine corporate income tax (3.5%–8.93%) applies only if the S corp has federal taxable income at the corporate level.

Does Maine recognize the federal S election?

Maine automatically recognizes the federal S election; there is no separate Maine S-corporation election. Maine Form 1120ME instructions list S corporations under "Corporations not subject to Maine corporate income tax," with one exception. Form 1120S-ME no longer exists — Maine discontinued the separate S-corp/partnership income return beginning with the 2012 tax year. In the ordinary case an S corp files NO Maine income tax return of its own; its only recurring Maine filing is the pass-through entity withholding return (Form 941P-ME) if it has any non-Maine-resident owners.

Tax the entity still owes

Maine imposes no minimum corporate tax and no franchise-type entity tax on an S corporation. The Form 1120ME instructions state the exception precisely: "S corporations that incur federal taxable income (such as certain capital gains and certain built-in gains) at the corporate level are required to file Form 1120ME and report only the income that is taxed at the corporate level for federal purposes." That means the built-in gains tax, LIFO recapture and excess-net-passive-income situations — the same items that create corporate-level tax on the federal 1120-S. When Form 1120ME is required, Maine's graduated corporate income tax rates apply, running from 3.5% to 8.93% across brackets beginning at $0–$350,000 and topping out at $3,500,000 or more of adjusted federal taxable income. Form 1120ME is due the 15th day of the fourth month after year end (April 15 for calendar-year filers). Nexus thresholds for tax years beginning on or after January 1, 2022 are property $250,000, payroll $250,000, sales $500,000, or 25% of total property/payroll/sales in Maine.

Registering for payroll

Register with Maine Revenue Services for an income tax withholding account through the Maine Tax Portal (revenue.maine.gov) — quarterly Form 941ME and annual Form W-3ME — and with the Maine Department of Labor for unemployment insurance contributions, which are reported on the combined quarterly return alongside withholding. Maine also launched a mandatory Paid Family and Medical Leave program with premium contributions beginning January 1, 2025, which applies to W-2 wages an owner pays themselves.

Annual filings

Form 941P-ME, Pass-through Entity Return of Maine Income Tax Withheld From Members — required if the S corp has Maine-source income and ANY member who is not a Maine resident; the 2025 return was due March 16, 2026, and the due date follows the federal 1120-S date, with the federal extension automatically extending it. Withholding is 7.15% of a nonresident individual member's estimated Maine-source distributive income (8.93% if the member is a C corporation); quarterly estimated payments on Form 901ES-ME by April 30, July 31, October 31 and January 31 if annual withholding exceeds $1,000. Exemptions via Form 941AF-ME (member affidavit) or composite filing via Form 941CF-ME / Form 1040C-ME. Form 1120ME (April 15) ONLY if there is corporate-level federal taxable income. Maine Secretary of State annual report — due between January 1 and June 1 each year, $85 for a domestic business entity ($150 foreign), filed online.

Pass-through entity tax

LD 191 ("An Act to Support Maine Businesses by Establishing a Pass-through Entity Tax and Tax Credit"), 132nd Legislature, would have created an elective PTET with a 90% credit to owners. It was referred to the Committee on Taxation on January 14, 2025, was reported out on March 31, 2026 with an "Ought To Pass As Amended" recommendation, and then DIED ON ADJOURNMENT on April 29, 2026. It was never enacted. Confirming this independently, Maine Revenue Services' official 2026 pass-through entity forms page lists only withholding and composite forms (941P-ME, Schedules 2P/3P, 901ES-ME, 1099ME, 941CF-ME, 941AF-ME, 1040C-ME, PAR) — there is no entity-level PTET return. Maine is one of a small handful of states with no SALT-cap workaround, so a Maine S-corp owner gets no state-level SALT benefit from the election.

The mistake owners make most often in Maine

Two related traps. First, owners look for a Maine S-corp income tax return and either file nothing at all or hunt for the defunct Form 1120S-ME; the actual recurring obligation is Form 941P-ME plus 7.15% withholding for every non-Maine-resident shareholder, and missing it produces penalties even though the entity owes no Maine income tax itself. Second — and this is the costly one for anyone planning around SALT — Maine has NO pass-through entity tax. LD 191 died on adjournment April 29, 2026, so any advice, article or software table saying Maine has a PTET is wrong for 2026.

Important

Filing your federal Form 2553

Businesses operating in Maine send Form 2553 to the IRS Kansas City service center — fax 855-887-7734. Full address and filing checklist for Maine.

Frequently asked questions

Does Maine require a separate S-corporation election?

No. Maine does not require a separate state election. Maine automatically recognizes the federal S election; there is no separate Maine S-corporation election. Maine Form 1120ME instructions list S corporations under "Corporations not subject to Maine corporate income tax," with one exception.

What tax does an S corporation pay in Maine?

None in the normal case — no franchise tax, no minimum tax, no annual entity fee. Maine corporate income tax (3.5%–8.93%) applies only if the S corp has federal taxable income at the corporate level.

Where do I file Form 2553 from Maine?

With the IRS Kansas City service center. Fax 855-887-7734, or mail to Department of the Treasury, Internal Revenue Service, Kansas City, MO 64999.

What is the most common S-corp mistake in Maine?

Two related traps. First, owners look for a Maine S-corp income tax return and either file nothing at all or hunt for the defunct Form 1120S-ME; the actual recurring obligation is Form 941P-ME plus 7.15% withholding for every non-Maine-resident shareholder, and missing it produces penalties even though the entity owes no Maine income tax itself. Second — and this is the costly one for anyone planning around SALT — Maine has NO pass-through entity tax. LD 191 died on adjournment April 29, 2026, so any advice, article or software table saying Maine has a PTET is wrong for 2026.

Compare with other states: Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri.

Sources

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Researched from official Maine sources and verified July 30, 2026. State tax rules change. This is general information, not tax advice — confirm with the state or a CPA before you rely on it.