AUGUSTA — The Mills Administration submitted Monday a proposed change package to the supplemental budget in order to accommodate recent adjustments to the federal tax code contained in the more than 6,400 pages of pandemic relief bills enacted by Congress over the past several months, including the most recent at the end of last month, according to a news release.
With this proposal, the Mills Administration hopes to maintain a degree of stability and predictability for individual and corporate taxpayers in Maine, to conform to the federal changes as much as possible, and to provide tax relief to Maine families and businesses during the ongoing COVID-19 pandemic, per the release.
The proposal reduces the burden for Maine families and businesses by:
• Preserving the power of the Earned Income Tax Credit, which provides tax relief to middle- and low-income Maine families with children.
• Providing to Maine families improved tax treatment and flexibility for health care spending, like qualified medical expenses or telehealth costs, to assist people with their health needs during the pandemic.
• Creating an allowance for any Maine resident whose work situation changed at the onset of COVID-19 to ensure they are not required to pay income tax to two states.
• Maintaining standard treatment so no Maine business owes State taxes on Paycheck Protection Program proceeds spent to keep employees on payroll or on other deductible expenses such as rent or utilities.
• Extending the State tax credit for Maine small businesses to help them recoup costs associated with providing paid family medical leave, thereby helping them keep people employed and ensuring Maine workers have the means to quarantine, isolate, and/or care for family members amid the pandemic.
• Permitting graduates to claim the Opportunity Maine Tax Credit, which reimburses student loan payments, for completed student loan payments even if the graduate is unemployed during the pandemic.
• Expanding the Educators Expense Deduction for Maine teachers, which allows them to deduct unreimbursed expenses for classroom materials, now including personal protective equipment, disinfectant, and other COVID-19 related supplies.
The extension of these critical tax benefits to Maine families and businesses would result in a net revenue loss of approximately $1.285 million for the State for Fiscal Year 2021, which the Administration has proposed to pay for with savings in other areas.
“Right now, Maine people are focused on what’s most important: trying to keep themselves healthy, trying to provide for themselves and their families, and trying to get through this pandemic,” said Governor Janet Mills. “In this package, my Administration is maximizing tax relief wherever and whenever possible, providing as much stability and predictability to Maine businesses as we can, and providing whatever help we can to get Maine people through these trying times.”
The change package is specific to the upcoming State tax filing season and comes as individual filers, corporations, and CPAs across the nation attempt to keep pace with a multitude of recent COVID-19 related Federal tax code changes.
“Across the country, my counterparts and their teams have been closely reviewing the more than 6,480 pages of Federal pandemic relief legislation, much of it passed just weeks ago, to understand the tax implications for our states and to maximize wherever possible the benefits for our people,” said Kirsten Figueroa, Commissioner for the Department of Administrative and Financial Services, of which Maine Revenue Services is a division. “As we began that effort in Maine last summer, and through this most recent round of Federal relief, the Governor has always been clear on what she wants: prioritize stability and predictability and provide as much relief as possible to help Maine people, families, and businesses through this challenging time. That is what we are doing here.”
Maine tax forms and instructions for 2020, along with Maine estimated tax and withholding tables for 2021, are available through Maine Revenue Services or local accountants and tax preparers.
For calendar-year filers, the deadline for filing the 2020 Maine individual income tax return is April 15.