An Act To Conform to the United States Internal Revenue Code of 1986 and Provide Tax Relief to Maine Families
Emergency preamble. Whereas, acts and resolves of the Legislature do not become effective until 90 days after adjournment unless enacted as emergencies; and
Whereas, state tax law needs to be updated to conform to federal law before the 90-day period expires to provide clarity and certainty regarding the effect of the changes in federal tax laws on state tax laws; and
Whereas, legislative action is immediately necessary to ensure continued and efficient administration of the state income tax and certain other state taxes; and
Whereas, in the judgment of the Legislature, these facts create an emergency within the meaning of the Constitution of Maine and require the following legislation as immediately necessary for the preservation of the public peace, health and safety; now, therefore,
PART A
Sec. A-1. 36 MRSA §111, sub-§1-A, as amended by PL 2017, c. 24, §1, is further amended to read:
Sec. A-2. Application. This Part applies to tax years beginning on or after January 1, 2017 and to any prior tax years as specifically provided by the United States Internal Revenue Code of 1986 and amendments to that Code as of March 23, 2018.
PART B
Sec. B-1. 36 MRSA §5124-B, as amended by PL 2017, c. 170, Pt. D, §§5 and 6, is further amended to read:
§ 5124-B. Standard deduction; resident on or after January 1, 2016 but before January 1, 2018
For tax years beginning on or after January 1, 2016 but before January 1, 2018, the standard deduction of a resident individual is equal to the sum of the basic standard deduction and any additional standard deduction, subject to the phase-out under subsection 3.
Sec. B-2. 36 MRSA §5124-C is enacted to read:
§ 5124-C. Standard deduction; resident on or after January 1, 2018
Sec. B-3. 36 MRSA §5125, sub-§3, ¶A-1 is enacted to read:
Sec. B-4. 36 MRSA §5125, sub-§6, as enacted by PL 2017, c. 170, Pt. D, §7, is amended to read:
Sec. B-5. 36 MRSA §5125, sub-§7 is enacted to read:
Sec. B-6. 36 MRSA §5126, as amended by PL 2011, c. 380, Pt. N, §11 and affected by §19, is further amended to read:
§ 5126. Personal exemptions prior to 2018
For income tax years beginning on or after January 1, 1998 but before January 1, 1999, a resident individual is allowed $2,400 for each exemption that the individual properly claims for the taxable year for federal income tax purposes, unless the taxpayer is claimed as a dependent on another return. For income tax years beginning on or after January 1, 1999 but before January 1, 2000, a resident individual is allowed $2,750 for each exemption that the individual properly claims for the taxable year for federal income tax purposes, unless the taxpayer is claimed as a dependent on another return. For income tax years beginning on or after January 1, 2000 but before January 1, 2013, a resident individual is allowed $2,850 for each exemption that the individual properly claims for the taxable year for federal income tax purposes, unless the taxpayer is claimed as a dependent on another return. For income tax years beginning on or after January 1, 2013 but before January 1, 2018, a resident individual is allowed a deduction equal to the total amount of deductions allowed for personal exemptions in accordance with the Code, Section 151.
Sec. B-7. 36 MRSA §5126-A is enacted to read:
§ 5126-A. Personal exemptions on or after January 1, 2018
For purposes of this subsection, "dependent" has the same meaning as in the Code, Section 152.
For purposes of this subsection, "applicable amount" means:
Sec. B-8. 36 MRSA §5213-A, sub-§1, ¶A, as amended by PL 2015, c. 328, §4, is further amended to read:
(1) For an individual income tax return claiming one personal exemption, $100 for tax years beginning in 2016 and $125 for tax years beginning on or after January 1, 2017;
(2) For an individual income tax return claiming 2 personal exemptions, $140 for tax years beginning in 2016 and $175 for tax years beginning on or after January 1, 2017;
(3) For an individual income tax return claiming 3 personal exemptions, $160 for tax years beginning in 2016 and $200 for tax years beginning on or after January 1, 2017; and
(4) For an individual income tax return claiming 4 or more personal exemptions, $180 for tax years beginning in 2016 and $225 for tax years beginning on or after January 1, 2017.
For the purposes of this paragraph, personal exemption does not include a personal exemption for an individual who is incarcerated.
Sec. B-9. 36 MRSA §5213-A, sub-§1, ¶A-1 is enacted to read:
(1) For single individuals, $125;
(2) For individuals filing joint returns or as heads of households, $175 plus an additional amount equal to:
(a) For individuals filing joint returns, $25 if they can claim the federal child tax credit pursuant to the Code, Section 24 for no more than one qualifying child or dependent or $50 if they can claim the credit for more than one qualifying child or dependent; or
(b) For individuals filing as heads of households, $25 if they can claim the federal child tax credit pursuant to the Code, Section 24 for 2 qualifying children or dependents or $50 if they can claim the credit for more than 2 qualifying children or dependents.
Sec. B-10. 36 MRSA §5213-A, sub-§1, ¶B, as enacted by PL 2015, c. 267, Pt. DD, §19, is amended to read:
(1) Trade or business losses; capital losses; any net loss resulting from combining the income or loss from rental real estate and royalties, the income or loss from partnerships and S corporations, the income or loss from estates and trusts, the income or loss from real estate mortgage investment conduits and the net farm rental income or loss; any loss associated with the sale of business property; and farm losses included in federal adjusted gross income;
(2) Interest received to the extent not included in federal adjusted gross income;
(3) Payments received under the federal Social Security Act and railroad retirement benefits to the extent not included in federal adjusted gross income; and
(4) The following amounts deducted in arriving at federal adjusted gross income:
(a) Educator expenses pursuant to the Code, Section 62(a)(2)(D);
(b) Certain business expenses of performing artists pursuant to the Code, Section 62(a)(2)(B);
(c) Certain business expenses of government officials pursuant to the Code, Section 62(a)(2)(C);
(d) Certain business expenses of reservists pursuant to the Code, Section 62(a)(2)(E);
(e) Health savings account deductions pursuant to the Code, Section 62(a)(16) and Section 62(a)(19);
(f) Moving expenses pursuant to the Code, Section 62(a)(15);
(g) The deductible part of self-employment tax pursuant to the Code, Section 164(f);
(h) The deduction for self-employed SEP, SIMPLE and qualified plans pursuant to the Code, Section 62(a)(6);
(i) The self-employed health insurance deduction pursuant to the Code, Section 162(l);
(j) The penalty for early withdrawal of savings pursuant to the Code, Section 62(a)(9);
(k) Alimony paid pursuant to the Code, Section 62(a)(10);
(l) The IRA deduction pursuant to the Code, Section 62(a)(7);
(m) The student loan interest deduction pursuant to the Code, Section 62(a)(17); and
(n) The tuition and fees deduction pursuant to the Code, Section 62(a)(18) ; and .
(o) The domestic production activities deduction pursuant to the Code, Section 199.
Sec. B-11. 36 MRSA §5213-A, sub-§6, as corrected by RR 2015, c. 1, §42, is amended to read:
Sec. B-12. 36 MRSA §5219-KK, sub-§1, ¶A, as amended by PL 2017, c. 211, Pt. D, §6, is further amended to read:
(1) For persons filing as single individuals, $2,000;
(2) For persons filing joint returns or as heads of households that claim no more than 2 personal exemptions, $2,600; and
(3) For persons filing joint returns or as heads of households that claim 3 or more personal exemptions, $3,200.
Sec. B-13. 36 MRSA §5219-KK, sub-§1, ¶A-1 is enacted to read:
(1) For persons filing as single individuals, $2,050;
(2) For persons filing as heads of households that can claim the federal child tax credit pursuant to the Code, Section 24 for no more than one qualifying child or dependent or for persons filing joint returns, $2,650; and
(3) For persons filing as heads of households that can claim the federal child tax credit pursuant to the Code, Section 24 for more than one qualifying child or dependent or for persons filing joint returns that can claim the federal child tax credit pursuant to the Code, Section 24 for at least one qualifying child or dependent, $3,250.
Sec. B-14. 36 MRSA §5219-KK, sub-§1, ¶D, as enacted by PL 2013, c. 551, §3, is amended to read:
(1) Trade or business losses; capital losses; any net loss resulting from combining the income or loss from rental real estate and royalties, the income or loss from partnerships and S corporations, the income or loss from estates and trusts, the income or loss from real estate mortgage investment conduits and the net farm rental income or loss; any loss associated with the sale of business property; and farm losses included in federal adjusted gross income;
(2) Interest received to the extent not included in federal adjusted gross income;
(3) Payments received under the federal Social Security Act and railroad retirement benefits to the extent not included in federal adjusted gross income; and
(4) The following amounts deducted in arriving at federal adjusted gross income:
(a) Educator expenses pursuant to the Code, Section 62(a)(2)(D);
(b) Certain business expenses of performing artists pursuant to the Code, Section 62(a)(2)(B);
(c) Certain business expenses of government officials pursuant to the Code, Section 62(a)(2)(C);
(d) Certain business expenses of reservists pursuant to the Code, Section 62(a)(2)(E);
(e) Health savings account deductions pursuant to the Code, Section 62(a)(16) and Section 62(a)(19);
(f) Moving expenses pursuant to the Code, Section 62(a)(15);
(g) The deductible part of self-employment tax pursuant to the Code, Section 164(f);
(h) The deduction for self-employed SEP, SIMPLE and qualified plans pursuant to the Code, Section 62(a)(6);
(i) The self-employed health insurance deduction pursuant to the Code, Section 162(l);
(j) The penalty for early withdrawal of savings pursuant to the Code, Section 62(a)(9);
(k) Alimony paid pursuant to the Code, Section 62(a)(10);
(l) The IRA deduction pursuant to the Code, Section 62(a)(7);
(m) The student loan interest deduction pursuant to the Code, Section 62(a)(17); and
(n) The tuition and fees deduction pursuant to the Code, Section 62(a)(18) ; and .
(o) The domestic production activities deduction pursuant to the Code, Section 199.
Sec. B-15. 36 MRSA §5219-KK, sub-§2, as amended by PL 2017, c. 211, Pt. D, §7, is further amended to read:
Sec. B-16. 36 MRSA §5219-KK, sub-§2-A is enacted to read:
Sec. B-17. 36 MRSA §5219-SS is enacted to read:
§ 5219-SS. Dependent exemption tax credit
Sec. B-18. 36 MRSA §5250, sub-§2, ¶B, as amended by PL 1997, c. 668, §36, is further amended to read:
Sec. B-19. 36 MRSA §5403, first ¶, as enacted by PL 2015, c. 267, Pt. DD, §33, is amended to read:
On or about September 15th of each year as specified in subsections 1 to 6 this section, the assessor shall multiply the cost-of-living adjustment for taxable years beginning in the succeeding calendar year by the following:
Sec. B-20. 36 MRSA §5403, sub-§2, as enacted by PL 2015, c. 267, Pt. DD, §33, is amended to read:
Sec. B-21. 36 MRSA §5403, sub-§4, as amended by PL 2017, c. 170, Pt. D, §10, is further amended to read:
Sec. B-22. 36 MRSA §5403, sub-§5, as enacted by PL 2015, c. 267, Pt. DD, §33, is amended to read:
(1) For section 5213-A, subsection 1, paragraph A, subparagraph (2), 1.4;
(2) For section 5213-A, subsection 1, paragraph A, subparagraph (3), 1.6; and
(3) For section 5213-A, subsection 1, paragraph A, subparagraph (4), 1.8.
If the base credit amount, adjusted by application of the appropriate factor, is not a multiple of $5, any increase must be rounded to the next lowest multiple of $5; and
Sec. B-23. 36 MRSA §5403, sub-§6, as enacted by PL 2015, c. 267, Pt. DD, §33, is amended to read:
Sec. B-24. 36 MRSA §5403, sub-§§7 and 8 are enacted to read:
Sec. B-25. 36 MRSA §5403, 2nd ¶, as enacted by PL 2015, c. 267, Pt. DD, §33, is amended to read:
Except for subsection 5, paragraphs paragraph A and B, if the dollar amount of each item, adjusted by the application of the cost-of-living adjustment, is not a multiple of $50, any increase must be rounded to the next lowest multiple of $50.
Sec. B-26. Application. Those sections of this Part that amend the Maine Revised Statutes, Title 36, section 5213-A, subsection 1, paragraph B; section 5213-A, subsection 6; section 5219-KK, subsection 1, paragraph D; and section 5250, subsection 2, paragraph B and that enact Title 36, section 5125, subsection 3, paragraph A-1 and section 5219-SS apply to tax years beginning on or after January 1, 2018.
PART C
Sec. C-1. 36 MRSA §5122, sub-§1, ¶X, as amended by PL 2007, c. 539, Pt. CCC, §2, is further amended to read:
Sec. C-2. 36 MRSA §5122, sub-§1, ¶LL is enacted to read:
Sec. C-3. 36 MRSA §5122, sub-§2, ¶PP is enacted to read:
(1) Maine taxable income is not reduced below zero; and
(2) The amount has not been previously used as a modification pursuant to this paragraph.
Sec. C-4. 36 MRSA §5164, sub-§1, as amended by PL 2011, c. 548, §26 and affected by §35, is further amended to read:
Sec. C-5. 36 MRSA §5200-A, sub-§1, ¶S, as amended by PL 2007, c. 700, Pt. B, §1, is further amended to read:
Sec. C-6. 36 MRSA §5200-A, sub-§1, ¶DD is enacted to read:
Sec. C-7. 36 MRSA §5200-A, sub-§2, ¶BB is enacted to read:
(1) Maine taxable income is not reduced below zero; and
(2) The amount has not been previously used as a modification pursuant to this paragraph.
Sec. C-8. 36 MRSA §5203-C, sub-§2, ¶C, as enacted by PL 2003, c. 673, Pt. JJ, §3 and affected by §6, is amended to read:
Sec. C-9. Application. That section of this Part that amends the Maine Revised Statutes, Title 36, section 5164, subsection 1 applies to tax years beginning on or after January 1, 2018.
PART D
Sec. D-1. 36 MRSA §5200-A, sub-§1, ¶¶EE and FF are enacted to read:
Sec. D-2. 36 MRSA §5200-A, sub-§2, ¶G, as amended by PL 1997, c. 746, §10 and affected by §24, is further amended to read:
| Taxable year beginning in: | Subtractable dividend income: |
| 1989 | 10% |
| 1990 | 20% |
| 1991 | 30% |
| 1992 | 40% |
| 1993 or thereafter | 50%; |
Sec. D-3. 36 MRSA §5200-A, sub-§2, ¶¶CC, DD and EE are enacted to read:
Sec. D-4. Application. This Part applies to tax years beginning on or after January 1, 2017, except that those sections of this Part that enact the Maine Revised Statutes, Title 36, section 5200-A, subsection 1, paragraph FF and subsection 2, paragraph EE apply to tax years beginning on or after January 1, 2018.
PART E
Sec. E-1. 36 MRSA §5200, sub-§1, as amended by PL 2005, c. 618, §6 and affected by §22, is further amended to read:
| If the income is: | The tax is: |
| Not over $25,000 | 3.5% of the income |
| $25,000 but not over $75,000 | $875 plus 7.93% of the excess over $25,000 |
| $75,000 but not over $250,000 | $4,840 plus 8.33% of the excess over $75,000 |
| $250,000 or more | $19,418 plus 8.93% of the excess over $250,000 |
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable only by Maine, the rates provided in this subsection are applied only to the first $250,000 of the Maine net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the Maine net income of the entire group is taxed at 8.93%.
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable both within and without this State, the rates provided in this subsection are applied only to the first $250,000 of the net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the net income of the entire group is taxed at 8.93%.
Sec. E-2. 36 MRSA §5200, sub-§1-A is enacted to read:
| If the income is: | The tax is: |
| Not over $350,000 | 3.5% of the income |
| $350,000 but not over $1,050,000 | $12,250 plus 7.93% of the excess over $350,000 |
| $1,050,000 but not over $3,500,000 | $67,760 plus 8.33% of the excess over $1,050,000 |
| $3,500,000 or more | $271,845 plus 8.93% of the excess over $3,500,000 |
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable only by Maine, the rates provided in this subsection are applied only to the first $3,500,000 of the Maine net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the Maine net income of the entire group is taxed at 8.93%.
In the case of an affiliated group of corporations engaged in a unitary business with activity taxable both within and without this State, the rates provided in this subsection are applied only to the first $3,500,000 of the net income of the entire group and must be apportioned equally among the taxable corporations unless those taxable corporations jointly elect a different apportionment. The balance of the net income of the entire group is taxed at 8.93%.
Sec. E-3. 36 MRSA §5200, sub-§§2 to 4, as enacted by PL 2005, c. 457, Pt. FFF, §1 and affected by §2, are amended to read:
PART F
Sec. F-1. 5 MRSA §12004-I, sub-§18-B, as enacted by PL 1997, c. 732, §1, is amended to read:
| Education: Financial Aid | Advisory Committee on College Education Savings | Not Authorized | 20-A MRSA §11484 |
Sec. F-2. 20-A MRSA §11471, sub-§1, as enacted by PL 1997, c. 732, §4, is amended to read:
Sec. F-3. 20-A MRSA §11471, sub-§7, as enacted by PL 1997, c. 732, §4, is amended to read:
Sec. F-4. 20-A MRSA §11472, as enacted by PL 1997, c. 732, §4, is amended to read:
§ 11472. Maine Education Savings Program
The Maine College Education Savings Program, referred to in this chapter as the "program," is established to encourage the investment of funds to be used for higher education expenses at institutions of higher education and, beginning January 1, 2018, and as long as permitted by provisions of Section 529 of the federal Internal Revenue Code of 1986, expenses for tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school. The authority shall administer the program and act as administrator of the program fund.
Sec. F-5. 20-A MRSA §11477, sub-§2, ¶C, as enacted by PL 1997, c. 732, §4, is amended to read:
Sec. F-6. 20-A MRSA §11479, as enacted by PL 1997, c. 732, §4, is amended to read:
§ 11479. Tax exemption
The assets of the program fund, all program earnings and any income from operations are exempt from all taxation by the State or any of its political subdivisions. A deposit to any account, transfer of that account to a successor participant, designation of a successor beneficiary of that account, credit of program earnings to that account or qualified distribution from that account used for the purpose of paying higher education expenses of the designated beneficiary of that account pursuant to this chapter , as long as that distribution does not exceed the limits established in Section 529 of the federal Internal Revenue Code of 1986 or rollover distributions permitted under Section 529 of the federal Internal Revenue Code of 1986, does not subject that participant, the estate of that participant or any beneficiary to any state income or estate tax liability. In the event of cancellation or termination of a participation agreement and distribution of funds to a participant, the increase in value over the amount deposited in the program fund by that participant may be taxable to that participant in the year distributed.
Sec. F-7. 20-A MRSA §11484, as amended by PL 2017, c. 200, §§1 and 2, is further amended to read:
§ 11484. Advisory Committee on Education Savings
The Advisory Committee on College Education Savings, referred to in this chapter as the "advisory committee," is created to provide advice to the authority on the operation of the program and investment of the program fund.
The chair of the advisory committee must be appointed annually by the chair of the board.
Sec. F-8. 36 MRSA §5122, sub-§2, ¶J, as amended by PL 2003, c. 390, §33, is further amended to read:
Sec. F-9. Maine Revised Statutes amended; revision clause. Wherever in the Maine Revised Statutes the words "Maine College Savings Program" appear or reference is made to that program or those words, those words are amended to read or mean, as appropriate, "Maine Education Savings Program" and the Revisor of Statutes shall implement this revision when updating, publishing or republishing the statutes.
PART G
Sec. G-1. 36 MRSA §4102, sub-§5, as amended by PL 2015, c. 267, Pt. I, §1, is further amended to read:
Sec. G-2. 36 MRSA §4119 is enacted to read:
§ 4119. Annual adjustments for inflation
Beginning in 2018 and each year thereafter, on or about September 15th, for the estates of decedents who die during the succeeding calendar year, the assessor shall multiply the cost-of-living adjustment by the dollar amount contained in section 4102, subsection 5 applicable to estates of decedents dying on or after January 1, 2018. For the purposes of this section, the "cost-of-living adjustment" is the Chained Consumer Price Index for the 12-month period ending June 30th of the preceding calendar year divided by the Chained Consumer Price Index for the 12-month period ending June 30, 2017.
PART H
Sec. H-1. 36 MRSA §2536 is enacted to read:
§ 2536. Employer credit for family and medical leave
For tax years beginning on or after January 1, 2018, a person is allowed a credit against the tax otherwise due under this chapter in an amount equal to the federal employer credit for paid family and medical leave allowed to that person under the Code, Section 45S as a result of wages paid to employees based in the State during the taxable year.
The credit allowed under this section may not reduce the tax otherwise due under this chapter to less than zero. The credit may not be carried forward or carried back to any other tax year.
Sec. H-2. 36 MRSA §5219-UU is enacted to read:
§ 5219-UU. Employer credit for family and medical leave
For tax years beginning on or after January 1, 2018, a person is allowed a credit against the tax otherwise due under this Part in an amount equal to the federal employer credit for paid family and medical leave allowed to that person under the Code, Section 45S as a result of wages paid to employees based in the State during the taxable year.
The credit allowed under this section may not reduce the tax otherwise due under this Part to less than zero. The credit may not be carried forward or carried back to any other tax year.
PART I
Sec. I-1. Appropriations and allocations. The following appropriations and allocations are made.
ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF
Revenue Services, Bureau of 0002
Initiative: Provides one-time funding for computer programming changes.
| GENERAL FUND | 2017-18 | 2018-19 |
|
All Other
|
$0 | $229,000 |
 |
|
|
| GENERAL FUND TOTAL | $0 | $229,000 |
Emergency clause. In view of the emergency cited in the preamble, this legislation takes effect when approved.