Cuts to Maine's income, estate taxes now in effect
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New laws going into effect this year will lower the amount most working Mainers pay in income taxes and give tax cuts to heirs of wealthy or land-rich residents.
The changes, among dozens of new laws going into effect Jan. 1, were part of the two-year, $6.7 billion state budget passed by lawmakers in June.
The Portland Press Herald reported that the state’s top income tax rate will fall from 7.95% to 7.15%. The income threshold for the top rate will also increase from $20,900 to $37,500, leading to residents making between $21,050 and $37,500 to see their income tax rate drop down to 6.75%. Those making less than $21,050 will be taxed at 5.8%, according to the Press Herald.
The other major tax law change going into effect Jan. 1 is a more than doubling of the exemption threshold of Maine’s estate tax. Estates valued at nearly $5.5 million will be exempt from the tax. Currently, estates valued at $2 million or more are subject to the tax.
Molly Liddell, a partner in Pierce Atwood LLP’s trusts and estates group, told the Press Herald the law is “easily the most significant change in Maine estate tax policy in a decade.”
To help pay for the tax cuts, lawmakers kept the sales tax at 5.5%, as it’s been since October 2013, instead of allowing it to fall back to 5% as originally planned. Lawmakers also increased the lodging tax on hotel rooms from 8% to 9% and eliminated sales-tax exemptions on hundreds of goods and services.
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