Moving from Canada to Maine: Graduated Rates, No Local Income Tax, and the New Brunswick Corridor

Maine is the US state closest to the Maritimes in geography and in temperament, and New Brunswick and Nova Scotia residents move there for Portland's healthcare, technology, and financial services employers, Bath Iron Works' shipbuilding, and the state's universities. The tax picture is a graduated income tax topping out at 7.15%, no local income taxes, a 5.5% sales tax, and an estate tax with an exemption just over $7 million.

Key takeaways

• Maine's graduated income tax runs 5.8% to 7.15%. No local income taxes.
• Sales tax is 5.5% statewide with no local additions.
• Property tax is near 1.1% effective with a homestead exemption.
• Maine has an estate tax with an exemption of $7.16 million for 2026.
• Maine starts from federal AGI and allows a pension income deduction that has grown to about $48,000 per person.

The Canadian departure

Departure tax applies to non-registered investments, private company shares, crypto, and foreign property at fair market value on the day you leave. Canadian real estate, RRSPs, TFSAs, and pensions are excluded. Report on Form T1243, list holdings on Form T1161 if the total exceeds $25,000, and post security under Form T1244 to defer tax on illiquid assets. The rate is your province's: on a $300,000 unrealized gain, roughly $72,000 from Alberta and $80,000 from Ontario, Quebec, or BC. Provincial health coverage ends around your departure date; confirm the exact date with your plan and arrange US coverage to start the same month.

US federal side

Dual-status return in the arrival year, FBAR on Canadian accounts above $10,000 aggregate, Form 8938 above thresholds, and the RRSP treaty deferral federally. The TFSA loses its tax-free status the day you become a US person; close it before crossing. Equity compensation vesting after the move is split by working days between Canada and the US.

Maine's side

Graduated income tax from 5.8% to 7.15%; no local income taxes; 5.5% sales tax with no local additions (8% on prepared food and lodging); property tax near 1.1% effective with a homestead exemption; estate tax with a $7.16 million exemption for 2026 and rates from 8% to 12%. Maine starts from federal AGI and allows a pension income deduction of $48,216 per person for 2025 (reduced by Social Security-type benefits received), which covers most Canadian pension and RRIF income.

The RRSP

Federally deferred under Article XVIII of the treaty and deferred for Maine because the state starts from federal AGI. Withdrawals face 25% Canadian withholding on lump sums, 15% on periodic RRIF payments within the treaty limit, a US foreign tax credit federally, and Maine's graduated rates after the pension income deduction.

Who makes this move

New Brunswick and Nova Scotia healthcare professionals to MaineHealth and Portland's hospital systems, Maritime shipbuilding and marine engineers to Bath Iron Works, Canadian technology and financial services staff to Portland's employers (WEX, IDEXX, Unum), and Canadian academics to the University of Maine and Bowdoin.

Worked example

A Saint John nurse practitioner moves to Portland, Maine, on June 30 with $120,000 of unrealized gain in a non-registered account, $350,000 in an RRSP, and a Saint John home sold in the departure year.

• Departure tax. $120,000 gain, $60,000 taxable, at New Brunswick's roughly 52.5%: about $31,500.
• Home. Sold as a resident under the principal residence exemption.
• RRSP. No tax on departure; federal and Maine deferral.
• Portland. Combined top rate about 44.15%. HST 15% becomes sales tax 5.5%. Property tax on a $500,000 home around $5,500.

Official sources

"When you leave Canada, you are considered to have sold certain types of property (even if you have not sold them) at their fair market value (FMV) and to have immediately reacquired them for the same amount. This is called a deemed disposition and you may have to report a capital gain (also known as departure tax)." — Canada Revenue Agency, Leaving Canada (emigrants), https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/individuals-leaving-entering-canada-non-residents/leaving-canada-emigrants.html

"The income tax rates are graduated, with rates ranging from 5.8% to 7.15% for tax years beginning after 2015." — Maine Revenue Services, Individual Income Tax (1040ME), https://www.maine.gov/revenue/taxes/income-estate-tax/individual-income-tax-1040me

"You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least: 31 days during the current year, and 183 days during the 3-year period that includes the current year and the 2 years immediately before that." — Internal Revenue Service, Substantial Presence Test, https://www.irs.gov/individuals/international-taxpayers/substantial-presence-test

Practitioner note

Maine's pension deduction is one of the largest in the Northeast and covers most Canadian pension and RRIF income for a retired couple. The estate tax at just over $7 million is the item to plan for; Maritime retirees arriving with a home, two RRSPs, and a cottage are sometimes near it.

See also: Weighing Florida instead? See the Canada-to-Florida guide. Browse every corridor by city, province, and state.

Next step

Fairlight prepares the Canadian departure return, the first-year federal and state returns, and ongoing cross-border filings. See cross-border pricing or book a call.