An Act To Attract Young Families to Maine and Keep Young Families in Maine by Expanding the Child Care Tax Credit
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 36 MRSA §5218, as amended by PL 2005, c. 519, Pt., DD, §§1 to 3, is further amended to read:
§ 5218. Income tax credit for child care expenses before 2015
1. Resident taxpayer. A For tax years beginning before January 1, 2015, a resident individual is allowed a credit against the tax otherwise due under this Part in the amount of 25% of the federal tax credit allowable for child and dependent care expenses in the same tax year, except that for tax years beginning in 2003, 2004 and 2005, the applicable percentage is 21.5% instead of 25%.
2. Nonresident taxpayer. A For tax years beginning before January 1, 2015, a nonresident individual is allowed a credit against the tax otherwise due under this Part in the amount of 25% of the federal tax credit allowable for child and dependent care expenses multiplied by the ratio of the individual's Maine adjusted gross income, as defined in section 5102, subsection 1-C, paragraph B, to the individual's entire federal adjusted gross income, as modified by section 5122, except that for tax years beginning in 2003, 2004 and 2005, the applicable percentage is 21.5% instead of 25%.
2-A. Part-year resident taxpayer. An For tax years beginning before January 1, 2015, an individual who files a return as a part-year resident in accordance with section 5224-A is allowed a credit against the tax otherwise due under this Part in the amount of 25%, except that for tax years beginning in 2003, 2004 and 2005 the applicable percentage is 21.5%, instead of 25%, of the federal tax credit allowable for child and dependent care expenses multiplied by a ratio, the numerator of which is the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph A for that portion of the taxable year during which the individual was a resident plus the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph B for that portion of the taxable year during which the individual was a nonresident and the denominator of which is the individual's entire federal adjusted gross income, as modified by section 5122.
3. Quality child care services. The credit provided by subsections 1, 2 and 2-A doubles in amount if the child care expenses were incurred through the use of quality child care services as defined in section 5219-Q, subsection 1.
4. Refund. The credit allowed by this section may result in a refund of up to $500. In the case of a nonresident individual, the refundable portion of the credit may not exceed $500 multiplied by the ratio of the individual's Maine adjusted gross income, as defined in section 5102, subsection 1-C, paragraph B, to the individual's entire federal adjusted gross income, as modified by section 5122. In the case of an individual who files a return as a part-year resident in accordance with section 5224-A, the refundable portion of the credit may not exceed $500 multiplied by a ratio, the numerator of which is the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph A for that portion of the taxable year during which the individual was a resident plus the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph B for that portion of the taxable year during which the individual was a nonresident and the denominator of which is the individual's entire federal adjusted gross income, as modified by section 5122.
Sec. 2. 36 MRSA §5218-A is enacted to read:
§ 5218-A. Income tax credit for child care expenses beginning in 2015
1. Resident taxpayer. For tax years beginning on or after January 1, 2015, a resident individual is allowed a credit against the tax otherwise due under this Part in the amount of 100% of the federal tax credit allowable for child and dependent care expenses in the same tax year.
2. Nonresident taxpayer. For tax years beginning on or after January 1, 2015, a nonresident individual is allowed a credit against the tax otherwise due under this Part in the amount of 100% of the federal tax credit allowable for child and dependent care expenses multiplied by the ratio of the individual's Maine adjusted gross income, as defined in section 5102, subsection 1-C, paragraph B, to the individual's entire federal adjusted gross income, as modified by section 5122.
3. Part-year resident taxpayer. For tax years beginning on or after January 1, 2015, an individual who files a return as a part-year resident in accordance with section 5224-A is allowed a credit against the tax otherwise due under this Part in the amount of 100% of the federal tax credit allowable for child and dependent care expenses multiplied by a ratio, the numerator of which is the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph A for that portion of the taxable year during which the individual was a resident plus the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph B for that portion of the taxable year during which the individual was a nonresident and the denominator of which is the individual's entire federal adjusted gross income, as modified by section 5122.
4. Quality child care services. The credit provided by subsections 1, 2 and 3 doubles in amount if the child care expenses were incurred through the use of quality child care services as defined in section 5219-Q, subsection 1.
5. Refundability. The tax credit under this section is refundable after the application of nonrefundable credits. In the case of a nonresident individual, the refundable portion of the credit may not exceed 100% or, in the case of child care expenses eligible to be doubled pursuant to subsection 4, 200% of the federal tax credit allowable for child and dependent care expenses in the same tax year multiplied by the ratio of the individual's Maine adjusted gross income, as defined in section 5102, subsection 1-C, paragraph B, to the individual's entire federal adjusted gross income, as modified by section 5122. In the case of an individual who files a return as a part-year resident in accordance with section 5224-A, the refundable portion of the credit may not exceed 100% or, in the case of child care expenses eligible to be doubled pursuant to subsection 4, 200% of the federal tax credit allowable for child and dependent care expenses in the same tax year multiplied by a ratio, the numerator of which is the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph A for that portion of the taxable year during which the individual was a resident plus the individual's Maine adjusted gross income as defined in section 5102, subsection 1-C, paragraph B for that portion of the taxable year during which the individual was a nonresident and the denominator of which is the individual's entire federal adjusted gross income, as modified by section 5122.
SUMMARY
This bill amends the income tax credit for child care expenses by increasing the credit from 25% of the federal tax credit allowable for child and dependent care expenses to 100% of that federal tax credit for tax years beginning on or after January 1, 2015. This bill also makes the credit completely refundable.