In 2011, Governer LePage signed into law a tax reform bill, which has come into effect in 2013. Here are the highlights:
- Provided tax relief for roughly two thirds of all Maine’s taxpayers.
- Eliminated the 2 percent tax rate on Mainers with the lowest income, removing all income tax burden for 70,000 low income Maine families.
- Reduced the top income tax rate from 8.5 percent to 7.95 percent.
- Conformed personal exemptions and deductions to the federal standard, eliminating the marriage penalty and the alternative minimum tax.
- Increased the death tax exemption from $1 million to $2 million saving Maine farms and small businesses during transitions.
- Eliminates a tax charged on meals in retirement facilities.
The reduction in the income tax rate means that a Maine family of 4 with a Maine adjusted gross income (MAGI) of $25,000 or less could have no state income tax withheld, will have no liability and will not be required to file a Maine income tax return. If you fall into this category, you should contact your employer about adjusting your Maine tax withholding via Form W-4ME.
A family of 4 with a MAGI of $65,000 and who takes the standard deduction can anticipate a decrease of about $300 in state income tax.
A single individual with a MAGI of $35,000 and who takes the standard deduction can anticipate a decrease of about $200 in state income tax.
It is not too often that taxes actually go down!