An Act to Phase Out the Income Tax

Printed on recycled paper
132nd MAINE LEGISLATURE
FIRST REGULAR SESSION-2025
Legislative Document No. 856
H.P. 542 House of Representatives, March 4, 2025
An Act to Phase Out the Income Tax
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative BOYER of Poland.
Cosponsored by Representatives: CHAPMAN of Auburn, DUCHARME of Madison,
FAULKINGHAM of Winter Harbor, FLYNN of Albion, FREDETTE of Newport,
WADSWORTH of Hiram, Senators: BERNARD of Aroostook, TIMBERLAKE of
Androscoggin.

Page 1 - 132LR1636(01)
1Be it enacted by the People of the State of Maine as follows:
2Sec. 1. 36 MRSA §5111, sub-§1-F, as enacted by PL 2015, c. 267, Pt. DD, §3, is
3 amended to read:
41-F. Single individuals and married persons filing separate returns; tax years
5beginning 2017 from 2017 to 2029. For tax years beginning on or after January 1, 2017
6 but not later than December 31, 2029, for single individuals and married persons filing
7 separate returns:
If Maine taxable income is: The tax is:
Less than $21,050 5.8% of the Maine taxable income
At least $21,050 but less than $50,000 $1,221 plus 6.75% of the excess over
$21,050
$50,000 or more $3,175 plus 7.15% of the excess over
$50,000
8Sec. 2. 36 MRSA §5111, sub-§2-F, as enacted by PL 2015, c. 267, Pt. DD, §5, is
9 amended to read:
162-F. Heads of households; tax years beginning 2017 from 2017 to 2029. For tax
17 years beginning on or after January 1, 2017 but not later than December 31, 2029, for
18 unmarried individuals or legally separated individuals who qualify as heads of households:
If Maine taxable income is: The tax is:
Less than $31,550 5.8% of the Maine taxable income
At least $31,550 but less than $75,000 $1,830 plus 6.75% of the excess over
$31,550
$75,000 or more $4,763 plus 7.15% of the excess over
$75,000
19Sec. 3. 36 MRSA §5111, sub-§3-F, as enacted by PL 2015, c. 267, Pt. DD, §7, is
20 amended to read:
273-F. Individuals filing married joint returns or surviving spouses; tax years
28beginning 2017 from 2017 to 2029. For tax years beginning on or after January 1, 2017
29 but not later than December 31, 2029, for individuals filing married joint returns or
30 surviving spouses permitted to file a joint return:
If Maine taxable income is: The tax is:
Less than $42,100 5.8% of the Maine taxable income
At least $42,100 but less than $100,000 $2,442 plus 6.75% of the excess over
$42,100
$100,000 or more $6,350 plus 7.15% of the excess over
$100,000
31Sec. 4. 36 MRSA §5111, sub-§7 is enacted to read:
387. Phase-out. For tax years beginning on or after January 1, 2026, for each taxpayer
39 filing an income tax return under this chapter, the amount of tax calculated under subsection
40 1-F, 2-F or 3-F, as adjusted under section 5403, is reduced as follows.
41 A. For a tax year beginning in 2026, the amount of tax calculated is multiplied by 80%.
42 B. For a tax year beginning in 2027, the amount of tax calculated is multiplied by 60%.
8
9
10
11
12
13
14
15
19
20
21
22
23
24
25
26
31
32
33
34
35
36
37
Page 2 - 132LR1636(01)
1 C. For a tax year beginning in 2028, the amount of tax calculated is multiplied by 40%.
2 D. For a tax year beginning in 2029, the amount of tax calculated is multiplied by 20%.
3Sec. 5. 36 MRSA §5111, sub-§8 is enacted to read:
48. Income tax eliminated. Beginning January 1, 2030, no taxes are imposed under
5 this section.
6Sec. 6. 36 MRSA §5200, sub-§1-A, as enacted by PL 2017, c. 474, Pt. E, §2, is
7 amended to read:
81-A. Imposition and rate of tax beginning 2018 from 2017 to 2029. For tax years
9 beginning on or after January 1, 2018 but not later than December 31, 2029, a tax is
10 imposed for each taxable year at the following rates on each taxable corporation and on
11 each group of corporations that derives income from a unitary business carried on by 2 or
12 more members of an affiliated group:
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
13 In the case of an affiliated group of corporations engaged in a unitary business with activity
14 taxable only by Maine, the rates provided in this subsection are applied only to the first
15 $3,500,000 of the Maine net income of the entire group and must be apportioned equally
16 among the taxable corporations unless those taxable corporations jointly elect a different
17 apportionment. The balance of the Maine net income of the entire group is taxed at 8.93%.
26 In the case of an affiliated group of corporations engaged in a unitary business with activity
27 taxable both within and without this State, the rates provided in this subsection are applied
28 only to the first $3,500,000 of the net income of the entire group and must be apportioned
29 equally among the taxable corporations unless those taxable corporations jointly elect a
30 different apportionment. The balance of the net income of the entire group is taxed at
31 8.93%.
32Sec. 7. 36 MRSA §5200, sub-§7 is enacted to read:
337. Phase-out. For tax years beginning on or after January 1, 2026 and ending before
34 January 1, 2030, for each taxpayer filing an income tax return under this chapter, the
35 amount of tax calculated under subsection 1-A is reduced as follows.
36 A. For a tax year beginning in 2026, the amount of tax calculated is multiplied by 80%.
37 B. For a tax year beginning in 2027, the amount of tax calculated is multiplied by 60%.
38 C. For a tax year beginning in 2028, the amount of tax calculated is multiplied by 40%.
39 D. For a tax year beginning in 2029, the amount of tax calculated is multiplied by 20%.
40Sec. 8. 36 MRSA §5200, sub-§8 is enacted to read:
13
14
15
16
17
18
19
20
21
22
23
24
25
Page 3 - 132LR1636(01)
18. Income tax eliminated. Beginning January 1, 2030, no taxes are imposed under
2 this section.
3Sec. 9. Spending reductions. Beginning with fiscal year 2026-27, the Department
4 of Administrative and Financial Services, Bureau of the Budget shall reduce the budget
5 each fiscal year for each department of State Government proportionally to achieve an
6 overall reduction in expenditures equal to the reduction of revenue under the Maine
7 Revised Statutes, Title 36, section 5111, subsections 7 and 8 and section 5200, subsections
8 7 and 8.
9Sec. 10. Corrective legislation. By January 1, 2029, the Department of
10 Administrative and Financial Services, Bureau of Revenue Services shall submit legislation
11 to the joint standing committee of the Legislature having jurisdiction over taxation matters
12 that corrects any conflicts in the Maine Revised Statutes resulting from the repeal of the
13 individual and corporate income tax as proposed in Title 36, section 5111, subsections 7
14 and 8 and section 5200, subsections 7 and 8. The joint standing committee may report out
15 a bill to the 134th Legislature in 2029 making the necessary changes.
16SUMMARY
17 This bill phases out the income tax over 5 years beginning in 2026 and requires that
18 state department budgets be reduced proportionally.
17
18