January 13, 2015


State & Local Taxes in 2015


Maine Tax Code Features

Progressive Features

• Provides a nonrefundable 5 percent Earned Income Tax Credit (EITC)

• Provides a refundable property tax “circuit breaker” credit via the personal income tax

• Limits itemized deductions for upper-income taxpayers

• Sales tax excludes groceries

• Requires the use of combined reporting for the corporate income tax

Regressive Features

• EITC is nonrefundable

• Comparatively high cigarette tax rate

Tax Changes Enacted in 2013 & 2014

• Capped itemized deductions at $27,500. Charitable contributions and medical expenses are carved out of the cap

• Converted property tax circuit breaker to a refundable personal income tax credit, changed eligibility, and increased maximum credit

• Added digital downloads to sales tax base.

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, Maine has the 44th most unfair state and local tax system in the country. States with regressive tax struc­tures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Appendix B for state-by-state rankings and more details).

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