Question 1: How do property taxes compare between different counties in Maine?
New data from the
Tax Foundation shows that on average Maine homeowners are paying 0.94% of the value of their homes in property taxes.
The rate doesn’t vary too much depending on where you live in Maine. Penobscot County pays 1.3%, that’s the highest in Maine. Hancock County pays 0.9%, that’s the lowest. Most other states see big shifts in the tax rates between different counties.
But homeowners in Cumberland County are still spending the most in property taxes because that’s where home values are the highest. The median property tax payment in Cumberland is $4,577. That’s almost $1,000 higher than anywhere else in Maine. York County is second-most at $3,691.
Question 2: How does that compare to other states?
Maine’s property tax rates are the 20th-highest in the U.S., so fairly average. And they’re low compared to the rest of New England. Connecticut, Vermont and New Hampshire are all in the top 10 highest.
But the
price of homes in Maine has increased faster than anywhere else in the U.S. over the last five years, with the median price going above $400,000. Salaries are not increasing as fast - Maine ranks 29th in the country
in income.
That’s part of the reason why the
Tax Foundation has Maine ranked #48 in the country for “property tax competitiveness.” According to their report, Maine’s property tax laws are more unattractive for families and businesses than anywhere in the country except Vermont and Connecticut.
Question 3: What does the future look like?
Several different think tanks agree that the future isn’t very bright, but they disagree on what the problem is.
The right-leaning
American Legislative Exchange Council has Maine ranked 45th in the country for its future economic outlook based on its tax laws. They say that even though Maine’s GDP has grown 70% in the last decade, that’s going to slow down because businesses and wealthy families won’t want to live here because Maine has some of the highest tax rates for corporations and rich families.
The left-leaning
Maine Center For Economic Policy also gives Maine a bad outlook but for the opposite reason. They argue that wealthy families and corporations are taxed too little and have too many loopholes, and in the future Maine’s education and healthcare systems won’t have enough funding.
There’s a bill in Maine’s Legislature right now that’s expected to pass and will create a task force to study ways to change the state’s property tax structure. Lawmakers have said they want to wait to make significant changes until the task force makes recommendations next year.
You’ve probably heard about Republicans’ idea to exempt seniors over age 65 from property tax if they’ve lived in Maine for 10 years. Some Democrats wanted to expand the Homestead Property Tax Exemption that lets most families take $25,000 of the value of their home when filing taxes and raise the limit to $95,000 over time.
But for now those proposals seem unlikely until we hear back from this new task force.
Question 4: What solutions have other states come up with? Could they work in Maine?
The Texas governor signed a law this week that will send an estimated $3.5 billion to school districts so they can lower their property taxes without hurting students.
Wyoming recently passed tax relief for seniors that’s less dramatic than what Maine Republicans proposed. It cuts taxes in half for seniors who have lived in Wyoming for 25 years.
Wyoming is also capping yearly property tax increases at 4% for everyone.
The
Montana governor wants to raise property taxes on second homes and Air BnBs so taxes can be lowered for other houses.