An Act To Reduce the Income Tax Burden on Maine Residents
PART A
Sec. A-1. 36 MRSA §5111, sub-§1-B, as enacted by PL 1999, c. 731, Pt. T, §3, is amended to read:
| If Maine Taxable income is: | The tax is: |
| Less than $4,200 | 2% of the Maine taxable income |
| At least $4,200 but less than $8,350 | $84 plus 4.5% of the excess over $4,200 |
| At least $8,350 but less than $16,700 | $271 plus 7% of the excess over $8,350 |
| $16,700 or more | $856 plus 8.5% of the excess over $16,700 |
Sec. A-2. 36 MRSA §5111, sub-§1-C is enacted to read:
| If Maine Taxable income is: | The tax is: |
| Less than $4,750 | 2% of the Maine taxable income |
| At least $4,750 but less than $9,450 | $95 plus 4.5% of the excess over $4,750 |
| At least $9,450 but less than $18,950 | $307 plus 7% of the excess over $9,450 |
| $18,950 or more | $972 plus 7.8% of the excess over $18,950 |
Sec. A-3. 36 MRSA §5111, sub-§2-B, as enacted by PL 1999, c. 731, Pt. T, §5, is amended to read:
| If Maine Taxable income is: | The tax is: |
| Less than $6,300 | 2% of the Maine taxable income |
| At least $6,300 but less than $12,500 | $126 plus 4.5% of the excess over $6,300 |
| At least $12,500 but less than $25,050 | $405 plus 7% of the excess over $12,500 |
| $25,050 or more | $1,284 plus 8.5% of the excess over $25,050 |
Sec. A-4. 36 MRSA §5111, sub-§2-C is enacted to read:
| If Maine Taxable income is: | The tax is: |
| Less than $7,150 | 2% of the Maine taxable income |
| At least $7,150 but less than $14,200 | $143 plus 4.5% of the excess over $7,150 |
| At least $14,200 but less than $28,450 | $460 plus 7% of the excess over $14,200 |
| $28,450 or more | $1,458 plus 7.8% of the excess over $28,450 |
Sec. A-5. 36 MRSA §5111, sub-§3-B, as enacted by PL 1999, c. 731, Pt. T, §7, is amended to read:
| If Maine Taxable income is: | The tax is: |
| Less than $8,400 | 2% of the Maine taxable income |
| At least $8,400 but less than $16,700 | $168 plus 4.5% of the excess over $8,400 |
| At least $16,700 but less than $33,400 | $542 plus 7% of the excess over $16,700 |
| $33,400 or more | $1,711 plus 8.5% of the excess over $33,400 |
Sec. A-6. 36 MRSA §5111, sub-§3-C is enacted to read:
| If Maine Taxable income is: | The tax is: |
| Less than $9,500 | 2% of the Maine taxable income |
| At least $9,500 but less than $18,950 | $190 plus 4.5% of the excess over $9,500 |
| At least $18,950 but less than $37,950 | $615 plus 7% of the excess over $18,950 |
| $37,950 or more | $1,945 plus 7.8% of the excess over $37,950 |
Sec. A-7. Application. This Part applies to tax years beginning on or after January 1, 2007.
PART B
Sec. B-1. 36 MRSA §5219-N, sub-§1, as amended by PL 2003, c. 390, §48, is further amended to read:
Sec. B-2. Application. This Part applies to tax years beginning on or after January 1, 2007.
PART C
Sec. C-1. 36 MRSA §1811, first ¶, as amended by PL 2001, c. 439, Pt. TTTT, §2 and affected by §3, is further amended to read:
A tax is imposed on the value of all tangible personal property and taxable services sold at retail in this State. The rate of tax is 7% on the value of liquor sold in licensed establishments as defined in Title 28-A, section 2, subsection 15, in accordance with Title 28-A, chapter 43; 7% 10% on the value of rental of living quarters in any hotel, rooming house or tourist or trailer camp; 10% on the value of rental for a period of less than one year of an automobile; 7% 9% on the value of prepared food; and 5% on the value of all other tangible personal property and taxable services. Value is measured by the sale price, except as otherwise provided.
Sec. C-2. Effective date. This Part takes effect October 1, 2007.
summary
This bill reduces the income tax burden on Maine residents by:
1. Reducing the top individual income tax rate from 8.5% to 7.8%; and
2. Increasing the low-income tax credit from $2,000 to $4,000 for individuals, married individuals filing separately and heads of households and to $8,000 for married persons and surviving spouses filing joint returns.
This bill offsets the loss of income tax revenue by increasing the rate of the sales tax imposed on prepared food from 7% to 9% and on short-term lodging from 7% to 10%.