An Act To Reform the Income Tax for Middle-income and Lower-income Families
Maine Legislature, Session 122, LD 1605
Committee: Taxation
Sponsors: STRIMLING, WOODBURY, DAMON, DOW, MILLS, NUTTING, PERRY, RAYE, ROSEN, TURNER
Amends: 36 MRSA §17, 36 MRSA §1760, 36 MRSA §1765, 36 MRSA §1811, 36 MRSA §1863, 36 MRSA §2012, 36 MRSA §2013, 36 MRSA §2014, 36 MRSA §2551, 36 MRSA §2552, 36 MRSA §2557, 36 MRSA §5111, 36 MRSA §5126, 36 MRSA §5219-S, 36 MRSA §5403

Legislative Document 
No. 1605 
S.P.586 
In Senate, April 28, 2005 
An Act To Reform the Income Tax for Middle-income and Lower-
income Families 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Senator STRIMLING of Cumberland . 
Cosponsored by Representative WOODBURY of Yarmouth and 
JOY J. O'BRIEN 
Secretary of the Senate 
Senators: DAMON of Hancock, DOW of Lincoln, MILLS of Somerset, NUTTING of 
Androscoggin, PERRY of Penobscot, RAYE of Washington, ROSEN of Hancock, TURNER 
of Cumberland. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 36 MRSA §17S2, sub-§14, 1[B, as amended by PL 2003, c. 
673, Pt. V, §16 and affected §29, is further amended to read: 
B. 
"Sale price" does not include: 
(1) 
Discounts allowed and taken on sales: 
(2) 
Allowances in cash or by credit made upon the 
return of merchandise pursuant to warranty: 
(3) 
The price of property returned by customers, when 
the full price is refunded either in cash or by credit: 
+4t--~~~r~-Eeeeivea-~~--~r-eE-~~~~-iB 
iBs~alliB~-~-~~~-&~-Eepai£iB~-~~~~rt~-selaT 
i~-sepaEa~ely-eAaE~ea-eE-s~a~eat 
+§t--~-~--eAaF~ea-~~-~~~~~~--iB--~~-~--a 
~Ea~Qi~y--eE--6ipT--as--a--speei~ieally--s6a6ea--seFviee 
eAaE~eT-wAeB-~ha~-~-~~~~~~~-9y-a-Ae6elT 
me6elT-~~~~~-~--e~he~-ea~4A~-~4~-~-i~s 
empleyees-as-wa~est 
(6) 
The amount of any tax imposed by the United States 
on or with respect to retail sales, whether imposed 
upon 
the 
retailer 
or 
the 
consumer, 
except 
any 
manufacturers I, importers I, alcohol or tobacco excise 
tax: 
+1t---~-~-ef--~~aB&p&~~a~i&B-~~~-~~-Fe~aileF~s 
plaee-ef-~~i~~~-~-~~-~~-~~-wa~a-&hipmeB~-is 
maae-~~~~~-~~-~Re--pa~eaa&e~r-~~~-~~--6Aese 
eAaF~es-~~-~~~~-s6a6ea-~-~~-~FaBspeF6a6ieB 
eeeQFS-~-~-&~-eemmeB-~a~~ie£7-~~~-~rr~r-eF 
~Ae-YBi6ea-S~a6es-mailt 
(8) 
The 
fee 
imposed 
by 
Title 
10, 
section 
1169, 
subsection 11: 
(9) 
The fee imposed by section 4832, subsection 1; or 
(10) 
The lead-acid battery deposit imposed by Title 
38, section 1604, subsection 2-B. 
Sec. 2. 36 MRSA §1760, sub-§2, as amended by PL 1997, c. 729, 
Pt. A, §1, is repealed. 
Page l-LR0362(1) 
• 
Sec. 3. 36 MRSA §1760, sub-§3, as amended by PL 1991, c. 824, 
Pt. A, §73, is repealed. 
Sec. 4. 36 MRSA §1760, sub-§4, as amended by PL 1967, c. 89, 
is repealed. 
Sec. 5. 36 MRSA §1760, sub-§5 is repealed. 
Sec. 6. 36 MRSA §1760, sub-§5-A, as amended by PL 1975, c. 
623, §57, is repealed. 
Sec. 7. 36 MRSA §1760, sub-§6, as amended by PL 1999, c. 502, 
§§1 to 3 and PL 2003, c. 689, Pt. B, §6, is repealed. 
Sec. 8. 36 MRSA § 1760, sub-§8, as amended by PL 1991, c. 546, 
§18, is repealed. 
Sec. 9. 36 MRS A §1760, sub-§9, as amended by PL 1977, c. 686, 
§1, is repealed. 
Sec. 10. 36 MRSA §1760, sub-§9-A, as enacted by PL 1973, c. 
594, is repealed. 
Sec. 11. 36 MRSA §1760, sub-§9-B, as amended by PL 1999, c. 
657, §21, is repealed. 
Sec. 12. 36 MRSA §1760, sub-§9-C, as enacted by PL 
1977, 
c.686, §2, is repealed. 
Sec. 13. 36 MRSA §1760, sub-§9-D, as amended by PL 1999, c. 
414, §20, is repealed. 
Sec. 14. 36 MRSA §1760, sub-§9-G, as enacted by PL 1991, c. 
851, §1, is repealed. 
Sec. 15. 36 MRSA §1760, sub-§12 is repealed. 
Sec. 16. 36 MRSA §1760, sub-§12-A, as amended by PL 1995, c. 
634, §1 and affected by §2, is repealed. 
Sec. 17. 36 MRSA §1760, sub-§14 is repealed. 
Sec. 18. 36 MRSA §1760, sub-§16, as amended by PL 2003, c. 
689, Pt. B, §6 and c. 705, §4 and affected by §14, is repealed. 
Sec. 19. 36 MRSA §1760, sub-§§17 and 18 are repealed. 
Sec. 20. 36 MRSA §1760, sub-§18-A, as amended by PL 1975, c. 
293, §4 and PL 2003, c. 689, Pt. B, §6, is repealed. 
Sec. 21. 36 MRSA §1760, sub-§19, as amended by PL 2003, c. 
588, §7, is repealed. 
Sec. 22. 36 MRSA §1760, sub-§20, as amended by PL 1991, c. 
546, §20, is repealed. 
Sec. 23. 36 MRSA §1760, sub-§21, as amended by PL 1995, c. 
640, §5, is repealed. 
Sec. 24. 36 MRSA §1760, sub-§22, as amended by PL 1995, c. 65, 
Pt. A, §141 and affected by §153 and Pt. C, §15, is repealed. 
Sec. 25. 36 MRSA §1760, sub-§23-C, as affected by PL 2003, c. 
614, §9; amended by c. 688, Pt. B, §12; and affected by §13, is 
repealed. 
• 
Sec. 26. 36 MRSA §1760, sub-§24 is repealed. 
Sec. 27. 36 MRSA §1760, sub-§25, as amended by PL 1999, c. 
708, §27 and affected by §52, is repealed. 
Sec. 28. 36 MRSA §1760, sub-§25-A, as affected by PL 2003, c. 
614, §9; amended by c. 695, Pte B, §25; and affected by Pte C, 
§1, is repealed. 
Sec. 29. 36 MRS A §1760, sub-§25-B, as amended by PL 2003, c. 
414, Pt. B, §63 and affected by c. 614, §9, is repealed. 
Sec. 30. 36 MRSA §1760, sub-§26, amended by PL 1997, c. 723, 
§1, is repealed. 
Sec. 31. 36 MRSA §1760, sub-§28, as amended by PL 1999, c. 
708, §28; PL 2001, c. 354, §3: and PL 2003, c. 689, Pt. B, §6, is 
repealed. 
Sec. 32. 36 MRSA § 1760, sub-§29, as amended by PL 1989, 
c . 
890, Pt. A, §10 and affected by §40, is repealed. 
Sec. 33. 36 MRSA §1760, sub-§30, as amended by PL 1989, c. 
890, Pt. A, §11 and affected by §40, is repealed. 
Sec. 34. 36 MRSA §1760, sub-§31, as amended by PL 2005, c. 12, 
Pt. S, §1, is repealed. 
Sec. 35. 36 MRSA §1760, sub-§32, as amended by PL 1997, c. 
557, Pt. D, §2 and affected by §4 and Pt. G, §1, is repealed. 
Sec. 36. 36 MRSA §1760, sub-§33, as repealed and replaced by 
PL 1977, c. 238, is repealed. 
.. 
, 
• 
Sec. 37. 36 MRSA §1760, sub-§34, as repealed and replaced by 
PL 1981, c. 163, §4, is repealed. 
Sec. 38. 36 MRSA § 1760, sub-§35, as amended by PL 1993, c. 
670, §2, is repealed. 
Sec. 39. 36 MRSA §1760, sub-§37, as amended by PL 1987, c. 
737, Pt. C, §§82 and 106; PL 1989, c. 6; c. 9, §2; and c. 104, 
Pt. C, §§8 and 10, is repealed. 
Sec. 40. 36 MRSA §1760, sub-§39, as enacted by PL 1977, c. 
686, §3, is repealed. 
Sec. 41. 36 MRSA §1760, sub-§40, as repealed and replaced by 
PL 1987, c. 497, §37, is repealed. 
Sec. 42. 36 MRSA §1760, sub-§41, as amended by PL 1999, c. 
759, §3 and affected by §4, is repealed. 
Sec. 43. 36 MRSA §1760, sub-§42, as amended by PL 2001, c. 
439, Pt. PPP, §1 and affected by §2, is repealed. 
Sec. 44. 36 MRSA §1760, sub-§43, as amended by PL 1983, c. 
828, §6, is repealed. 
Sec. 45. 36 MRSA §1760, sub-§44, as reallocated by PL 1983, c. 
562, is repealed. 
Sec. 46. 36 MRSA §1760, sub-§45, as amended by PL 1999, c. 
708, §29, is repealed. 
Sec. 47. 36 MRSA §1760, sub-§46, as repealed and replaced by 
PL 2003, c. 451, Pt. AA, §1, is repealed. 
Sec. 48. 36 MRS A §1760, sub-§47-A, as corrected by RR 1995, c. 
2, §95, is repealed. 
Sec. 49. 36 MRSA §1760, sub-§49, as repealed and replaced by 
PL 1999, c. 499, §l, is repealed. 
Sec. 50. 36 MRSA §1760, sub-§50, as enacted by PL 1983, c. 
859, Pt. M, §§6 and 13, is repealed . 
Sec. 51. 36 MRSA §1760, sub-§51, as repealed and replaced by 
PL 1985, c. 737, Pt. A, §95, is repealed. 
Sec. 52. 36 MRSA §1760. sub-§52, as enacted by PL 1985, c. 
737, Pt. 7, §96, is repealed. 
Sec. 53. 36 MRSA §1760, sub-§53, as enacted by PL 1985, c. 
737, Pt. 'A, §97, is repealed. 
Sec. 54. 36 MRSA §1760, sub-§55, as enacted by PL 1985, c. 
788, §l, is repealed. 
Sec. 55. 36 MRSA §1760, sub-§56, as amended by PL 1989, c. 
533, §7, is repealed. 
Sec. 56. 36 MRSA §1760, sub-§57, as enacted by PL 1987, c. 
343, §5, is repealed. 
Sec. 57. 36 MRSA §1760, sub-§58, as amended by PL 2003, c. 
588, §8, is repealed. 
Sec. 58. 36 MRSA §1760, sub-§59, as amended by PL 1989, c. 
.... 
700, Pt. 'A, §169, is repealed. 
Sec. 59. 36 MRSA §1760, sub-§60, as amended by PL 1997, c. 
545, §l, is repealed. 
Sec. 60. 36 MRSA §1760, sub-§61, as amended by PL 2003, c. 
588, §9, is repealed. 
Sec. 61. 36 MRSA §1760, sub-§62, as repealed and replaced by 
PL 1989, c. 502, Pt. 'A, §129, is repealed. 
Sec. 62. 36 MRSA §1760, sub-§63, as enacted by PL 1989, c. 
502, Pt. 'A, §l30, is repealed. 
Sec. 63. 36 MRSA §1760, sub-§64, as amended by PL 2003, c. 
588, §10, is repealed. 
Sec. 64. 36 MRSA §1760, sub-§65, as amended by PL 1993, c. 
670, §6, is repealed. 
Sec. 65. 36 MRSA §1760, sub-§66, as enacted by PL 1989, c. 
502, Pt. B, §47 and c. 581, §20 and repealed and replaced by c. 
871, §12, is repealed. 
Sec. 66. 36 MRSA §1760, sub-§67, as enacted by PL 1989, c. 
501, Pt. P, §30 and c. 533, §8 and repealed and replaced by c. 
871, §l3, is repealed. 
• 
Sec. 67. 36 MRSA §1760, sub-§69, as enacted by PL 1989, c. 
533, §8, is repealed. 
Sec. 68. 36 MRSA §1760, sub-§70, as enacted by PL 1989, c. 
533, §8 and amended by c. 871, §14, is repealed. 
... 
Sec. 69. 36 MRSA §1760, sub-§71, as enacted by PL 1989, c. 
533, §8, is repealed. 
Sec. 70. 36 MRSA §1760, sub-§72, as amended by PL 1999, c. 
708, §30, is repealed. 
Sec. 71. 36 MRSA §1760, sub-§§73, 74 and 75, as enacted by PL 
1989, c. 871, §15, are repealed. 
Sec. 72. 36 MRSA §1760, sub-§76, as amended by PL 2003, c. 
588, §11, is repealed. 
Sec. 73. 36 MRSA §1760, sub-§77, as enacted by PL 1993, c. 
532, §1, is repealed. 
Sec. 74. 36 MRSA §1760, sub-§78, as repealed and replaced by 
PL 1997, c. 725, §1, is repealed. 
Sec. 75. 36 MRSA §1760, sub-§79, as enacted by PL 1997, c. 
791, Pt. A, §2, is repealed. 
Sec. 76. 36 MRSA §1760, sub-§80, as enacted by PL 1999, c. 
286, §1, is repealed. 
Sec. 77. 36 MRSA §1760, sub-§81, as enacted by PL 1999, c. 
530, §10, is repealed. 
Sec. 78. 36 MRSA §1760, sub-§82, as reallocated by RR 1999, c. 
1, §48, is repealed. 
Sec. 79. 36 MRSA §1760, sub-§83, as reallocated by RR 1999, c. 
1, §49, is repealed. 
Sec. 80. 36 MRS A §1760, sub-§84, as enacted by PL 2001, c. 95, 
§6, is repealed. 
Sec. 81. 36 MRSA §1760, sub-§85, as reallocated by RR 2001, c. 
1, §45, is repealed. 
Sec. 82. 36 MRSA §1760, sub-§§86 and 87, as amended by PL 2003, 
c. 688, Pt. D, §3, are repealed. 
Sec. 83. 36 MRSA §1765, as amended by PL 1999, c. 518, §2, is 
repealed. 
Sec. 84. 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% 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% on the value of prepared food; 
and -5% 2% on the value of all other tangible personal property 
and taxable services. 
Value is measured by the sale price, 
except as otherwise provided. 
Sec. 85. 36 MRSA §1811, last" as repealed and replaced by PL 
2003, c. 510, Pt. C, §12 and affected by §13, is amended to read: 
Rental or lease of an automobile for one year or more must 
be taxed at the time of the lease or rental transaction at -5% ~ 
of the following: 
the total monthly lease payment multiplied by 
the number of payments in the lease or rental, the amount of 
equity involved in any trade-in and the value of any cash down 
payment. 
Collection 
and 
remittance 
of 
the 
tax 
is 
the 
responsibility 
of 
the 
person 
that 
negotiates 
the 
lease 
transaction with the lessee. 
Sec. 86. 36 MRSA §1863, as enacted by PL 1981, c. 503, is 
repealed. 
Sec. 87. 36 MRS A §1864, as enacted by PL 2001, c. 439, Pt. 
II, §1 and affected by §2, is repealed. 
Sec. 88. 36 MRSA §2012, as amended by PL 1967, c. 88, is 
repealed. 
Sec. 89. 36 MRSA §2013, as amended by PL 2001, c. 396, §24, 
is repealed. 
Sec. 90. 36 MRSA §2014, as enacted by PL 1983, c. 560, §§4 
and 6, is repealed. 
Sec. 91. 36 MRSA §2551, sub-§§l-B to I-G, 3-A, 4-A, 5-A, 5-B, 7-A, 
12-A, 18-A and 20-A are enacted to read: 
B. 
Administratiye and support services. 
"Administrative 
and support services" means purchases of office administrative 
services, 
facilities 
support 
services, 
employment 
services, 
business support services, 
travel arrangement and reservation 
services, 
investigation 
and 
security 
services, 
services 
to 
buildings 
and 
dwellings, 
waste 
management 
and 
remediation 
services and all other support services. 
-
I-C. 
Amusement and recreation services. 
"Amusement 
and 
recreation 
services" 
means 
theater 
and 
opera 
performances, 
movies, 
pari-mutuel 
racing 
net 
receipts, 
spectator 
sporting 
events, 
commercial 
participant 
amusements 
and 
all 
other 
recreation services. 
I-D. 
Apparel 
services. 
"Apparel 
services" 
includes 
cleaning, storage and repair of clothing and shoes. 
I-E. 
Business and legal services. 
"Business 
and legal 
services" means 
tax preparation services, 
legal services 
and 
other personal business services. 
I-F. 
Construction 
services. 
"Construction 
services" 
includes 
residential 
building, 
commercial 
and 
institutional 
building, manufacturing and industrial building. water, sewer and 
pipeline construction services. 
I-G. 
Education services. 
"Education services" 
includes 
consumer purchases of services 
from 
elementary 
and 
secondary 
schools, private and public schools of higher education. nursery 
schools and commercial and vocational schools. 
3-A. 
Financial services. 
"Financial 
services" 
includes 
medical 
care 
and 
hospitalization 
insurance. 
income 
loss 
insurance. 
workers' 
compensation insurance, 
brokerage charges, 
investment counseling fees. bank service charges. trust services. 
safe deposit box fees. 
services furnished without payment by 
financial intermediaries, expenses of handling life insurance and 
pension plans, 
motor 
vehicle 
insurance, 
nondepository credit 
intermediation 
and 
related 
activities. 
securities, 
commodity 
contracts. 
investments. 
monetary 
authorities 
and 
depository 
credit intermediation. real estate services and rental leasing 
activities. 
4-A. 
Health services. 
"Health services" 
means 
consumer 
purchases 
of 
services 
from 
dentists. 
hospitals. 
physicians. 
nursing homes and other professional medical service providers. 
5-A. 
Information services. 
"Information services" means 
services from newspaper publishers. periodicals publishers. book 
publishers. database publishers, directory and other publishers. 
software publishers. motion picture and video industries. sound 
recording industries. 
radio and television broadcasters. cable 
networks and program distributors. data processing businesses and 
other providers of information services. 
5-B. 
Management and enterprise services. 
"Management and 
enterprise 
services" 
includes 
services 
related 
to 
the 
administration, oversight and management of other establishments 
of a company or enterprise. 
7-A. 
Personal appearance services. 
"Personal appearance 
services" includes barber shops, beauty parlors and health clubs. 
~1~2c-~A~.~~P~r~o~f~~s~jonal, 
scientific 
and 
technical 
servi~ 
"ProfessionaL scientific and technical services" includes legal 
gervices, accounting and bookkeeping services, architectural and 
engineering 
services, 
specialized 
design 
services, 
custom 
computer 
programming, 
computer 
systems 
design, 
other 
computer-related 
services, 
facilities 
management 
services, 
management consulting services, environmental and other technical 
consulting 
services, 
scientific 
research 
and 
development 
services, advertising and related seryices, veterinary services, 
and other professional, scientific and technical services. 
18-A. 
Social 
and 
organization 
services. 
"Social 
and 
organization 
services" 
includes 
consumer 
purchases 
of 
professional 
association 
memberships. 
club 
and 
fraternal 
organization 
memberships. 
domestic 
services, 
other 
household 
operations 
services 
and 
religious 
and 
welfare 
activities, 
including donations to such organizations. 
20-A. 
Transportation 
and 
warehousing 
services, 
"Transportation and warehousing services" includes airline, bus, 
railroad, 
truck, 
watercraft, 
limousine. 
toll 
road, 
pipeline. 
postal. courier, messenger. warehousing and storage services. 
Sec. 92. 36 MRSA §2552, sub-§l, as amended by PL 2005, c. 12, 
Pt. VV, §§2 and 3 and Pt. TTT, §3 and affected by §4, is further 
amended to read: 
1. Rate. 
A tax at the rate of --S% ~ is imposed on the 
value of the following services sold in this State: 
A. 
Extended cable and satellite television services; 
B. 
Fabrication services; 
c. 
Rental of video media and video equipment; 
D. 
Rental of furniture, 
audio media and audio equipment 
pursuant to a rental-purchase agreement as defined in Title 
9-A, section 11-105; 
E. 
Telecommunications services; 
F. 
The 
installation, 
maintenance 
or 
repair 
of 
telecommunications equipment; 
• 
G. 
Private nonmedical institution services; aRe 
H. 
Community support servicesTL 
I. 
Personal appearance services: 
J. 
Apparel services: 
K. 
Business and legal services: 
L. 
Amusement and recreation services: 
M. 
Health services; 
N. 
Education services; 
O. 
Social and organization services; 
P. 
Financial services; 
O. 
Professional, scientific and technical services; 
R. 
Administrative and support services; 
S. 
Information services: 
T. 
Transportation and warehousing services; 
U. 
Construction services: and 
V. 
Management and enterprise services. 
Sec. 93. 36 MRSA §2557, sub-§l, as enacted by PL 2003, c. 673, 
Pt. V, §25 and affected by §29, is amended to read: 
this 
laws 
1. 
Exemptions by constitutional provisions. 
Sales that 
State is prohibited from taxing under the constitution or 
of the United States or under the constitution of this 
State; and 
Sec. 94. 36 MRSA §2557, sub-§§2 to 29, as enacted by PL 2003, 
c. 673, Pt. V, §25 and affected by §29, are repealed. 
Sec. 95. 36 MRSA §5111, sub-§§l-C, 2-C and 3-C are enacted to 
read: 
I-C. 
Single individuals and married persons filing separate 
returns; tax years beginning 2006. 
For tax years beginning on or 
after January 1, 2006, for single individuals and married persons 
filing separate returns: 
If Maine taxable income is: 
Less than $8,~ 
At._ '~_'-l~~350 but 
less than $25,000 
At least $25,000 
but less than 
$50,000 
$50,000 or more 
The tax is: 
2% of the Maine 
taxable income 
$167 
plus 
4.5% 
of the excess 
over $8,350 
$916 plus 7% of 
the excess over 
$25,000 
$2,666 plus 
8.5% of the 
excess over 
$50,000 
2-C. 
Heads of households: tax years beginning 2006. 
For 
tax years beginning on or after January It 2006, for unmarried 
individuals or legally separated individuals who qualify as heads 
of households: 
If Maine taxable income is: 
Less than $12,500 
At least $12,500 
but less than 
$37,500 
At least $37,500 but 
less than $75,000 
$75,000 or more 
The tax is: 
2% of the Maine 
taxable income 
$250 plus 4.5% 
of the excess 
over $12,500 
$1,375 plus 7% 
of the excess 
over $37,500 
$4,000 plus 
8.5% of the 
excess over 
$75,000 
3-C. 
Individuals 
filiA9'~rried joint return or sv.rviving 
spouses: tax rears beginning 2006. 
For tax years beginning on or 
after January 
1, 
2006, 
for 
individuals filing married joint 
returns or surviving spouses permitted to file a joint return: 
If Maine taxable income is: 
The tax is: 
Page ll-LR0362(1) 
'. 
Less than $16,700 
At least $16,700 
but less than 
$50,000 
At least $50,000 but 
less than $100,000 
$100,000 or more 
2,\ of the Maine 
taxable income 
$334 plus 4.5'\ 
of the excess 
over $16,700 
$1. 833 plus 7,\ 
of the excess 
over $50,000 
$5,333 plus 
8.5'\ of the 
excess over 
$100,000 
Sec. 96. 36 MRSA §5126, as amended by PL 2001, c. 583, §16, 
is further amended to read: 
§5l26. Personal exemptions 
For income tax years beginning on or after January 1, 1998 
but before January 1, 
1999, 
a resident individual is allowed 
$2,400 for each exemption that the individual properly claims for 
the taxable year for federal income tax purposes, unless the 
taxpayer is claimed as a dependent on another return. 
For income 
tax years beginning on or after January 1, 
1999 but before 
January 1, 2000, a resident individual is allowed $2,750 for each 
exemption that the individual properly claims for the taxable 
year for federal 
income tax purposes, 
unless the taxpayer is 
claimed as a dependent on another return. 
For income tax years 
beginning on or after January 1, 2000 but before January 1, 2006, 
a res ident individual is allowed $2,850 for each exemption that 
the individual properly claims for the taxable year for federal 
income 
tax 
purposes, 
unless 
the 
taxpayer 
is 
claimed 
as 
a 
dependent on another return. 
f~r tax years beginning on or af~ 
January I. 2006. a resident individual is allowed an amount equal 
to 
the personal 
exemption amount 
determined under 
the 
Code, 
Section 151 
for 
each exemption that the 
individual properly 
~laims for the taxable year for federal income tax purposes, 
unless the taxpayer is claimed as a dependent on another return. 
Sec. 97. 36 MRSA §5219-S, as amended by PL 2003, c. 20, Pt. 
GG, §l, is further amended to read: 
§52l9-S. Earned income credit 
A taxpayer is allowed a refundable credit against the taxes 
otherwise due under this Part equal to --!i%-
10'\ of the federal 
earned income credit for the same taxable year, except that for 
tax years beginning in 2003, 
2004 
and 
2005, 
the applicable 
percentage is 4.92% iRS~eaQ-9~-9%. 
~Re-e~eai~-maY-R9~-~eaaee-~Re 
s~a~e-iRe9me-~aH-~9-*ess-~RaR-Be~9T 
Sec. 98. 36 MRSA §5403, as repealed and replaced by PL 1999, 
c. 731, Pt. T, §10 and affected by §ll, is amended to read: 
§5403. AD~ual adjustments for inflation 
Beginning 
in 
2002, 
and 
each 
subsequent 
calendar 
year 
thereafter, on or about September 15th, the State Tax Assessor 
shall multiply the cost-of-living adjustment for taxable years 
beginning in the succeeding calendar year by the dollar amounts 
of the tax rate tables specified in section 5111, subsections 
l-Rr-a-R-aas-a-R l-C, 2-C and 3-C. 
If the dollar amounts of each 
rate bracket, 
adjusted 
by 
application of 
the 
cost-of-living 
adjustment, 
are not multiples of $50, 
any increase must be 
rounded 
to 
the 
next 
lowest 
multiple 
of 
$50. 
If 
the 
cost-of-living adjustment for any taxable year is 1.000 or less, 
no adjustment may be made for that taxable year in the dollar 
bracket amounts of the tax rate tables. 
The assessor shall 
incorporate such changes into the income tax forms, instructions 
and withholding tables for the taxable year. 
Sec. 99. 
Revisor's review; cross-references. 
The 
Revisor 
of 
Statutes shall review the Maine Revised Statutes and include in 
the errors and inconsistencies bill submitted to the 
Second 
Regular Session of the 122nd Legislature pursuant to Title 1, 
section 94 
any sections necessary to correct and update 
any 
cross-references in the statutes to provisions of law repealed in 
this Act. 
Sec. 100. Application. 
Those sections of this Act that amend 
the Maine Revised Statutes, Title 36, section 5126 and section 
5219-S apply to tax years beginning on or after January 1, 2006. 
SUMMARY 
This bill repeals exemptions, credits and refunds under the 
sales and use tax and the service provider tax, lowers the rate 
of those taxes from 5% to 2% and changes the income tax rates. 
It also increases the earned income tax credit and makes that 
credi t 
refundable and increases the personal exemption to match 
the federal exemption.