Maine Tax Changes for 2019
Use tax (sales tax) reporting on Maine individual income tax returns. For tax years beginning on or after January 1, 2019, the calculation used to report unpaid use tax on the Maine individual income tax return is lowered from .08% to .04% of Maine adjusted gross income.
For most taxpayers, this is the easiest and most cost-effective method of reporting Maine use tax. Use tax applies when sales tax has not been charged. A purchase made out-of-state is the most common type of transaction subject to use
tax. For instance, if you purchased goods from a vendor located in Massachusetts, whether by mail order or by taking delivery in Massachusetts, use tax applies if the goods are brought to Maine for use here. A Maine resident or business does not escape sales tax by purchasing out-of-state.
Common exempt goods are grocery staples and goods purchased for resale.
ABLE savings account subtraction modification.
For tax years beginning on or after January 1, 2020, earnings on funds held in a qualified Achieving a Better Life Experience (ABLE) account are deductible in calculating Maine taxable income.
Property tax fairness credit.
For tax years beginning on or after January 1, 2020, the property tax fairness credit is increased to 100% of the benefit base that is greater than 5% (previously 6%) of the individual’s income, up to $750 ($1,200 for individuals 65 years of age or older).
Earned income credit.
For tax years beginning on or after January 1, 2020, the Maine earned income credit is increased from 5% to 12% of the federal earned income tax credit (25% for eligible individuals who do not have a qualifying child). The credit is also extended to individuals who are 18 to 24 years of age, have no qualifying children, and are otherwise qualified for the federal earned income tax credit.
Tax exemption – commercial producers of maple syrup and honey.
The definition of "commercial agricultural production" has been amended to include the production of maple syrup and honey, thereby qualifying those commercial producers for the sales tax exemption under commercial agricultural production.
Homestead exemption. The law increases the homestead exemption from $20,000 to $25,000 for property tax years beginning on or after April 1, 2020. The law also increases the State reimbursement to municipalities from 62.5% to 70% of revenue lost due to the exemption, also for property tax years beginning on or after April 1, 2020.
Renewable energy equipment. The law exempts solar and wind energy equipment from property tax. A taxpayer claiming the exemption must file an application with the municipality in the first year the exemption is sought. MRS must work with a stakeholder group and report a procedure for renewable energy facility valuation to the Legislature by December 1, 2019. Effective September 19, 2019.