This bill allows companies that produce biofuels or renewable chemicals in Maine to transfer their tax credits to other individuals or businesses who have not yet claimed them. The key mechanism requires the original taxpayer to notify the state assessor and submit a transfer form, after which the recipient can apply the credit against their own Maine income tax liability as if they had produced the products themselves. Both the original producer and the recipient must follow the same rules regarding credit limits and carry-forward provisions, and the recipient must attach proof of the transfer to their tax return. This change aims to increase the flexibility of using these tax incentives by allowing them to be passed to third parties rather than being limited to the original qualifying business.
This bill makes Maine's affordable housing income tax credit permanent by removing its expiration date of December 31, 2028. The program allows developers to receive tax credits for building or preserving affordable housing units, which they can use to offset their state income tax liability. Key provisions include maintaining an annual credit allocation cap of $15 million, setting aside 10% of credits for rural development preservation projects, and allowing unused credits to be carried forward to future years. The legislation directly affects housing developers and property owners who qualify for the tax credit, ensuring continued financial incentives for affordable housing development beyond the previous sunset date.
This bill directs the Maine State Housing Authority to administer a program offering grants of up to $15,000 to help reduce mortgage rates for first-time home buyers with incomes within federal limits. The grants are intended for owner-occupied single-family residences and can be used to lower the interest rate on the purchase loan. Additionally, the bill allows Maine taxpayers to deduct private mortgage insurance payments from their state income tax for their primary residence in the state. These changes aim to make homeownership more affordable for lower and moderate-income residents while providing tax relief for mortgage insurance costs.
LD 1520 (An Act To Reduce The Income Tax Paid By Volunteers For Mileage Reimbursements) changes Maine's tax treatment for volunteers driving for charitable organizations. Starting in 2026, volunteers will only pay state income tax on mileage reimbursements that exceed the federal standard business mileage rate (set by the IRS). This means reimbursements at or below the federal rate will not be taxed by Maine, directly benefiting volunteers who drive for charities. The bill aligns Maine's tax calculation with federal rules for business travel, reducing the taxable portion of charitable mileage payments.
This bill creates a 30% income tax credit (capped at $300,000 annually) for small waterfront businesses in Maine that make qualifying disaster mitigation improvements to their property. It directly affects businesses meeting the gross receipts test ($47 million average annual revenue over 3 years) that operate on "working waterfront property" (e.g., commercial fishing, boating, or aquaculture operations with water access). Qualifying projects include structural elevation, stormwater management systems, erosion control, flood-resistant construction, and hazard warning systems designed to meet specific building codes. The credit applies to costs of projects completed after January 1, 2025, and cannot be combined with other similar tax credits. Unused credit amounts may be carried forward for up to 10 years.
This bill makes Maine state income tax applicable to paid family and medical leave benefits that are not included in a recipient's federal adjusted gross income. Individuals receiving these benefits can elect to have 5% state income tax withheld from their payments when filing a new claim. The bill aligns Maine's tax treatment with federal rules by requiring benefits to be reported as taxable income for state purposes, unless they were already counted toward federal income. It also mandates that the benefits administrator inform claimants about the tax implications and withholding options at the time of filing.
LD 1363 exempts income earned by Maine residents under 18 years old from state income tax, applying to both the minor's own earnings and income earned by a dependent minor claimed by another taxpayer. The bill amends Maine tax code to remove such income from taxable calculations, effective for tax years beginning January 1, 2026. This directly affects minors and their families by eliminating tax liability on minor-earned income, such as wages or allowances. The exemption applies regardless of whether the minor is claimed as a dependent.
LD 671 would eliminate Maine's state income tax for tax years beginning January 1, 2026, removing this tax from residents and businesses. It requires the state to review and update laws referencing income tax and establish a new budgeting system for state agencies. Under this system, agencies must justify their entire budget from scratch every eight years (zero-based budgeting) and during other years, submit proposals for 5% and 10% funding reductions. The Department of Administrative and Financial Services must report on necessary legal changes by the 2026 legislative session to implement these provisions.
LD 1899 creates a new deduction for Maine state income tax on medical and dental expenses paid by taxpayers or their spouses/dependents. It allows a deduction for expenses that qualify under federal tax law (Internal Revenue Code), even if they don't meet the federal threshold or weren't claimed on federal returns. The deduction applies to expenses not covered by insurance and is effective for tax years beginning January 1, 2026. This directly affects individual Maine taxpayers who pay for healthcare costs, expanding their state tax relief beyond federal requirements.
LD 229 adjusts Maine's individual income tax brackets and rates for tax years beginning in 2026, replacing the existing 2017-2025 brackets. It affects three filing statuses: single individuals (and married filing separately), heads of households, and married couples filing jointly. For 2026, the bill increases income thresholds for each tax bracket (e.g., the lowest bracket for single filers rises from under $21,050 to under $41,600) and modifies rates, including raising the top rate to 8.2% for incomes over $500,000 for single filers. The changes apply to all Maine taxpayers in these filing categories starting January 1, 2026.
