ME
Does Maine tax tips and overtime?
The federal deduction and the Maine deduction are separate questions. Here is where Maine actually lands, and why.
How Maine builds its tax base
Maine starts from your federal adjusted gross income. Both deductions are below-the-line — they reduce federal taxable income but leave AGI untouched — so neither reaches this state's return automatically. Anything you get here had to be legislated separately.
Tips in Maine
Still taxedMaine Form 1040ME line 14 starts from federal AGI, which IRC §224 does not reduce; Maine Revenue Services' Office of Tax Policy report recommended "Do not adopt" and stated that "[a]bsent an update of the conformity date Maine would not conform to this deduction," Governor Mills's Oct. 1, 2025 determination under P.L. 2025 ch. 336 declined to adopt it for TY2025, and the enacted supplemental budget L.D. 2212 (signed April 10, 2026), which moved Maine's IRC conformity date to Dec. 31, 2025, conformed only to the standard deduction, R&E expensing and the nonitemizer charitable deduction — not tips.
Source: Maine Revenue Services, Office of Tax Policy Report on Maine Tax Conformity and Federal Public Law No. 119-21 (Sept. 30, 2025), and 2025 Form 1040ME Instructions — Important Update · last reviewed
Overtime in Maine
Still taxedIdentical treatment — the OTP report's conformity table lists "No Tax on Overtime — Do not adopt" (est. $27.8M revenue loss if adopted), the Governor's Feb. 4, 2026 supplemental-budget conformity package expressly proposed nonconformity for tips, overtime, car-loan interest and the senior exemption, and the enacted L.D. 2212 followed that recommendation, so §225 amounts stay in Maine taxable income.
Source: Maine DAFS, Overview of Tax Provisions in the Governor's Supplemental Budget (Feb. 3, 2026): "Items Governor proposes nonconformity - Tips, Overtime, Car Loan Interest and Senior Exemption" · last reviewed
Whatever your state does, your payroll taxes do not change
Both deductions reduce income tax only. Social Security and Medicare are still charged on the same wages, in every state.