HP1211, LD 1758, item 1, An Act To Strengthen Maine Families with Children by Changing the Income Tax Laws

An Act To Strengthen Maine Families with Children by Changing the Income Tax Laws

Be it enacted by the People of the State of Maine as follows:

Sec. 1. 36 MRSA §5219-S, sub-§§1 to 3, as amended by PL 2009, c. 213, Pt. BBBB, §16, are further amended to read:

1. Resident taxpayer prior to 2018. A For tax years beginning prior to January 1, 2018, a resident individual is allowed a credit against the tax otherwise due under this Part in the amount of 5% of the federal earned income credit for the same taxable year, except that for tax years beginning in 2009 and 2010, the applicable percentage is 4%.

2. Nonresident taxpayer prior to 2018. A For tax years beginning prior to January 1, 2018, a nonresident individual is allowed a credit against the tax otherwise due under this Part in the amount of 5% of the federal earned income credit for the same taxable year, except that for tax years beginning in 2009 and 2010, the applicable percentage is 4%, 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 prior to 2018. An For tax years beginning prior to January 1, 2018, 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 5% of the federal earned income credit for the same taxable year, except that for tax years beginning in 2009 and 2010, the applicable percentage is 4%, 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 §5219-S, sub-§3-A is enacted to read:

3-A. Resident, nonresident and part-year resident taxpayer beginning in 2018. For tax years beginning on or after January 1, 2018, an individual who files a return as a resident individual or a nonresident individual or 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 10% of the federal earned income credit for the same taxable year.

Sec. 3. 36 MRSA §5219-S, sub-§4, as amended by PL 2015, c. 328, §8, is further amended to read:

4. Limitation. The credit allowed by this section may not reduce the Maine income tax to less than zero, except that for tax years beginning on or after January 1, 2016 and before January 1, 2018, the credit allowed under subsections 1 and 3 is refundable. For tax years beginning on or after January 1, 2018, the credit allowed for an individual who files as a resident individual or part-year resident is refundable.

Sec. 4. 36 MRSA §5219-RR is enacted to read:

§ 5219-RR. Child tax credit

1. Credit. For tax years beginning on or after January 1, 2018, an individual who files a return as a resident individual or a nonresident individual or as a part-year resident in accordance with section 5224-A is allowed a credit against the tax otherwise due under this Part in an amount equal to the federal child tax credit claimed by that individual or part-year resident for the same taxable year.

2. Limitation. The credit allowed by this section may not reduce the Maine income tax to less than zero, except that, for an individual filing as a resident individual or as a part-year resident in accordance with section 5224-A, that portion of the federal additional child tax credit that is refundable on the individual's federal return is refundable on the individual's Maine return for the same taxable year.

SUMMARY

This bill, for tax years beginning in or after 2018:

1. Doubles the amount of the earned income tax credit a taxpayer may claim to 10% of the federal earned income credit; and

2. Enacts a new child tax credit to allow a taxpayer a credit in an amount equal to the federal child tax credit, which is an amount up to $1,000 for each qualifying child the taxpayer supports during the tax year. The credit is refundable only to the extent that the federal additional child tax credit is refundable and only for individuals filing as residents or part-year residents.

HP1211 LD 1758	Session - 128th Maine Legislature		LR 2478 Item 1
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