How Maine withholds on a bonus
Maine Revenue Services lets employers withhold a flat 5% on supplemental wages paid separately from regular pay. That is below both of Maine's upper brackets, 6.75% from $27,399 of taxable income and 7.15% from $64,849, so the flat rate under-withholds for most full-time earners. On a $10,000 bonus the percentage method withholds $2,200 federal, $620 Social Security, $145 Medicare and $500 Maine, leaving $6,535. Maine Paid Family and Medical Leave's 0.5% employee share also comes out of a bonus ($50) and is not included; there are no local income taxes.
Under the aggregate method Maine applies its brackets to the combined paycheck, which for a $60,000 earner withholds at 6.75% and 7.15% on the bonus, about $700 rather than $500; the federal line rises to about $2,700.
What the withholding means for your Maine return
Maine's 5% supplemental rate is lower than the 6.75% to 7.15% a middle earner's bonus is finally taxed at, so the state line on a bonus produces a balance due of $175 to $215 on $10,000 rather than a refund. The federal side runs the other way: 22% withheld against a 12% to 22% marginal rate returns roughly $750. New Hampshire residents who earn a bonus for work in Maine are withheld for Maine on it. The Maine paycheck calculator shows the marginal rates for any salary. Allowances on Form W-4ME do not reduce the flat 5% withheld from a separately paid bonus; they apply only when the bonus is combined with regular wages.