Budget & Taxes

LD 1665 increases property tax relief for Maine homeowners by raising the maximum qualifying property tax amount used to calculate the credit. For tax years beginning in 2025, it sets new "benefit base" limits: $2,450 for single filers, $3,200 for joint filers, up to $4,250 for heads of households with children, and $4,250 for residents 65+ (up from previous amounts). The credit, which offsets property taxes exceeding 4% of income, will now cap at $2,000 for most eligible seniors and families with children. The bill also mandates a study to simplify the credit application process by December 2025. This directly affects Maine homeowners filing state taxes who qualify for the property tax relief credit.

This bill authorizes Maine to issue up to $100 million in state bonds for transportation improvements, requiring voter approval in a November 2025 referendum. The funds would be allocated specifically: $85 million for highway and bridge repairs, and $15 million for nonhighway transportation modes like public transit or bike paths. The bonds must be repaid within 10 years, and any unspent funds after project completion would retire existing state debt. This proposal directly affects Maine taxpayers through bond financing and the state’s transportation infrastructure.

This bill creates a temporary process for Maine to adjust state income tax filing requirements when federal tax law changes occur before Maine can update its own laws. If the Commissioner determines federal changes affect Maine's tax system, they must report to the Governor, who can then direct temporary adjustments to ease taxpayer compliance. Taxpayers filing under this temporary measure will receive clear notices explaining the adjustment is contingent on future state legislation and that they won't face penalties for underpayment or incorrect refunds during this period. The bill directly affects Maine taxpayers and the Department of Administrative and Financial Services during the interim between federal changes and permanent state law updates.

LD 926 increases Maine’s research expense tax credit by doubling the credit rate from 5% to 10% (and 7.5% to 15% for basic research payments) and doubling the maximum credit amount from $25,000 to $50,000. It also reduces the base amount used to calculate the credit from 50% to 25% of a business’s average prior-year research spending in Maine. The bill requires the State Tax Assessor to annually report R&D spending data, credit claims, and economic impact metrics (like job growth and GDP contributions) to the Department of Economic and Community Development and the Legislature starting in 2027. This directly affects Maine-based businesses claiming the credit for qualified research costs conducted within the state.

This bill expands Maine's sales tax exemption to include more grocery items, making them tax-free when purchased at grocery stores. It defines "grocery staples" to cover bread, condiments, fruit bars, granola bars, pretzels, cheese sticks, nuts, seeds, meat sticks, sandwiches, and salads, while excluding alcohol, water, medicine, candy (except for certain fruit-based snacks like fruit bars), desserts, and cannabis. The exemption applies only to items sold in grocery stores (including convenience stores) but not in separate dining areas within stores. Effective January 1, 2026, this change aims to lower household costs for eligible food purchases.

LD 1419 increases the sales tax exemption for new manufactured housing (off-site construction) from 50% to 75% of the sale price, excluding materials. This aligns the tax treatment for off-site manufactured housing with on-site construction, which already received a 75% exemption. The change applies to sales occurring on or after January 1, 2026, directly reducing sales tax costs for buyers and manufacturers of manufactured housing.