Wealth-tax fever is spreading to less-wealthy states

But it also has growing pockets of wealth, which have caught the attention of state bean counters. Maine this month joined a growing list of blue states exploring or adopting new taxes on the highest earners, enacting a new 2% surcharge on annual income over $1 million.

The state’s new levy shows that wealth taxes aren’t just for states groaning with tech founders and hedge-fund billionaires. Even small or midsize economies see opportunity to raise revenue through new income-tax levies on top earners.

These Democratic-led states say the extra revenue is badly needed to fund state services in the wake of federal cuts to healthcare and food assistance from President Trump’s tax and spending bill. Republicans and state chambers of commerce generally oppose the taxes, warning they will undermine entrepreneurship and potentially lower state revenue by driving away well-off residents.

Washington state’s governor last month signed a similar millionaires tax into law, saying it was necessary to “rebalance an unfair system.” Massachusetts voters in 2022 approved a 4% surtax on annual income over $1 million. Revenue from the levy increased to nearly $3 billion during the 2025 fiscal year, from $2.46 billion a year earlier.

New York City Mayor Zohran Mamdani won his election on a platform to tax the rich. And hikes on top earners are a priority for some Democrats and progressive groups as they head to elections this fall in Rhode Island and Colorado.

The millionaire class has been on a steady climb in Maine in recent years, as it has in many other states, alongside the postpandemic stock market boom. Maine has about 2,600 tax filers with income over $1 million, up about 15% from 2024, according to state officials.

Maine’s 2% surcharge boosts the rate on income over $1 million to 9.15%, and is expected to raise about $150 million over two years. Maine Gov. Janet Mills, a Democrat who is running for U.S. Senate, said in a statement that the tax was needed to continue investments in healthcare, education and other services, “especially as we face such economic uncertainty because of actions of the Trump administration.”

Part of the extra revenue will be used to provide property tax relief for some Maine residents, Mills said. The revenue will also support a budget that provides free community college and invests in housing, she added.

Maine was enjoying solid economic growth for several years until 2025, when it had one of the slowest growing GDPs in the nation. The state’s tourism industry took a big hit from the plummeting number of Canadian visitors, who boycotted U.S. travel to protest Trump’s tariffs and threats to annex Canada, according to Garrett Martin, president of the Maine Center for Economic Policy.

Wealthy Mainers include high earners in financial and legal services, manufacturing and timber heirs, and well-heeled elderly residents who retire in the state, local economists and entrepreneurs say. Maine experienced an uptick of new residents during the pandemic, partly because of the rise of remote work. A survey of people who moved to the state from 2019 through 2023 found they had household incomes well above the state median, according to the state’s Department of Economic & Community Development.

Phil Harriman, a former Republican state senator who manages investment portfolios and opposes the new tax, said one of his clients has talked about moving to New Hampshire or cutting his charitable donations in the wake of the millionaire levy. Harriman also worries about owners of small and midsize businesses.

“It’s easy to say, ‘Oh, these people who live in Bar Harbor and Boothbay Harbor…they can afford a little more tax dollars.’ And that’s probably a fair statement,” Harriman said. But “there’s a significant amount of family businesses, whether they’re in the construction industry or excavating or retail, who are successful at their business and they’ll be impacted by this tax.”

Brian Langley, a 66-year-old restaurateur, said the tax is bad timing for him because he just sold his lobster restaurant and some small adjoining buildings for more than $1 million. He spent 30 years building the business, located near Acadia National Park, and has been counting on the sale proceeds to secure his retirement, he said.

“I get the appeal of taxing the millionaires. It would be different if I was making millions every single year. But I was a thousandaire for many years,” he said.

Still, a number of wealthy Mainers say they support the tax.

John Coleman, a millionaire entrepreneur who founded an advertising agency, wrote an op-ed in the Portland Press Herald this week praising the tax. In an interview, Coleman said he got a great education in Maine’s public schools, including help overcoming his dyslexia, and is happy to contribute more. Government funding is also crucial to building the kind of infrastructure and schools that attract talented people to the state and keep the economy growing, he added.

“Philanthropy can only solve certain kinds of problems,” Coleman said. “Infrastructure and public education and parts of healthcare, they really require more sophisticated support from the government to make them work. So you can’t donate your way out of many of these problems.”

Maine author Stephen King, when reached by phone, said he wasn’t aware of the new tax. But after hearing the details, he quickly voiced support.

“If I can take care of my family, send my kids to college, leave something for them for the hard work I have done … why not help others?” King said. “People who have a lot should be able to give a little more. Simple as that.”

Write to Jeanne Whalen at [email protected]