An Act To Reduce Income Tax Rates
Maine Legislature, Session 124, LD 1288
Committee: Taxation
Sponsors: SMITH, TARDY, COURTNEY, NASS, CRAFTS, CURTIS, DAVIS, GILES, LEWIN
Amends: 36 MRSA §5111, 36 MRSA §5200, 36 MRSA §5203-B, 36 MRSA §5203-C, 36 MRSA §5217-A, 36 MRSA §5219, 36 MRSA §5219-N, 36 MRSA §5403

Legislative Document 
No. 1288 
S.P.469 
In Senate, 
31,2009 
An Act To Reduce Income Tax Rates 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Senator SMITH of Piscataquis. 
Cosponsored by Representative TARDY of Newport and 
9tf){J~ 
- JOY 1. O'BRIEN 
Secretary of the Senate 
Senators: COURTNEY of York, McCORMICK of Kennebec, NASS of York, Representatives: 
CRAFTS of Lisbon, CURTIS of Madison, DAVIS of Sangerville, GILES of Belfast, LEWIN 
of Eliot. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. I. 36 MRSA §Sl11, sub-§l-B, as enacted byPL 1999, c. 731, Pt. T, §3, is 
amended to read: 
I-B. 
Singlt~ individuals and married persons filing separate returns; tax years 
beginning 2002 but before 2009. For tax years beginning on or after January 1, 2002 
but before January 1, 2009, for single individuals and married persons filing separate 
returns: 
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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 oyer $8,350 
$16,700 or more 
$856 plus_ 8.5% of the excess over $16,700 
Sec. 2. 36 MRSA §Sl11, sub-§l-C is enacted to read: 
l-C. Single individuals and married persons filing separate returns; tax years 
beginning in 2009. For tax years beginning on or after January 1, 2009 but before 
January 1, 2010, for single individuals and married persons filing separate returns: 
If Maine Taxable income is: 
The tax is: 
$4,850 or less 
% of the Maine taxable income 
More than $4,850 but less than $9,700 
$49 plus 3.5% of the excess over $4,850 
At least $9,700 but less than $19,450 
$218 plus 6% of the excess over $9,700 
$19,450 or more 
$803 plus 7.5% of the excess over $19,450 
Sec. 3. 36 MRSA §Sl11, sub-§l-D is enacted to read: 
I-D. Single individuals and married persons filing separate returns; tax years 
beginning in 2010. For tax years beginning on or after January.1, 2010 but before 
January 1, 2011, for single individuals and married persons filingseparate returns: 
If Maine Taxable iricome is: 
The tax is: 
$4,850 or less 
$0 
More than $4,850 but less than $9,700 
2% of the excess over $4,850 
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At least $9,700but less than $19,450 
$97 plus 4.5% of the excess over $9,700 
$19,450 or more 
$536 plus 6% of the excess over $19,450 
Sec. 4. 36 MRSA §S111, sub-§l-E is enacted to read: 
I-Eo Single individuals and married persons filing separate returns; tax years 
beginning 2011. 
For tax years beginning on or after Januaryl, 2011, for single 
individuals and married persons filing separate returns: 
If Maine Taxable income is: 
The tax is: 
$4,850 or less 
$0 
More than $4,850 but less than $9,700 
0.5% of the excess over $4,850 
At least $9,700 but less than $19,450 
$24 plus 3% of the excess over $9,700 
$19,450 or more 
$317 plus 4.5% of the excess over $19,450 
Sec. 5. ,36 MRSA §Sll1, sub-§2-B, as enacted by PL 1999, c.731, Pt. T, §5, is 
amended to read: 
2-B. Heads of households; tax .years beginning 2002 but before 2009. For tax 
years beginning on or after January 1, 2002 but before January 1, 2009, for unmarried 
individuals or legally separated individuals who qualify as heads of households: 
If Maine Taxable income is: 
Less than $6,300 
At least $6,300 but less than $12,500 
At least $12,500 but less than $25,050 
$25,050 or more 
The tax is: 
2% of the Maine taxable income 
$126 plus 4.5% of the excess over $6,300 
$405 plus 7% of the excess over $12,500 
$1,284 plus 8.5 110 of the excess over 
$25,050 
Sec. 6. 36 MRSA §S111, sub-§2-C is enacted to read: 
2-C. Heads of households; tax years beginning in 2009. For tax years beginning 
on or after January 1, 2009 but before January 1, 2010, for unmarried individuals or 
legally separated individuals who qualify as heads of households: 
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If Maine Taxable income is: 
The tax is: 
$7,300 or less 
% of the Maine taxable income 
More than $7,300 but less than $14,550 
.$73 plus 3.5% of the excess over $7,300 
At least $14,550 but less than $29,200 
$327 plus 6% of the excess over $14,550 
$29,200 or more 
$1,206 plus 7.5% of the· excess over 
$29,200 
Sec. 7. 36 MRSA §5111,sub-§2-D is enacted to read: 
2-D. Heads of housebolds; tax years beginning in 2010. For tax years beginning 
on or after January 1, 2010 but before January 1, 2011, for unmarried individuals or 
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legally separated individuals who qualify as heads of households: 
If Maine Taxable income is: 
The tax is: 
$7,300 or less 
$0 
More than-$7,300 but less than $14,550 
2% of the excess over $7,300 
At least $14,550 but less than $29,200 
$145 plus 4.5% of the excess over $14,550 
$29,200 or more 
$804 plus 6% of the excess over $29,200 
Sec. 8. 36 MRSA §Sll1, sub-§2-E is enacted to read: 
2-E. Heads of housebolds; tax years beginning 2011. For tax years beginning on 
or after January 1, 2011, for unmarried individuals or legally separated individuals who 
qualify as heads of households: 
If Maine Taxable income is: 
$7,300 or less 
More than $7,300 but less than $14,550 
At least $14,550 but less than $29,200 
$29,200 or more 
The tax is: 
$0 
0.5% of the excess over $7,300 
$36 plus 3% of the excess over $14,550 
$476 plus 4.5% of the excess over $29,200 
Sec. 9. 36 MRSA §5111, sub-§3-B, as enacted by PL 1999, c. 731, Pt. T, §7, is 
amended to read: 
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3:-B. 
Individuals filing married joint return or surVlvmg spouses; tax years 
beginning 2002 but before 2009. For tax years beginning on or after January 1, 2002 
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but before January 1, 2009, for individuals filing married joint returns or surviving 
spouses permitted to file a joint return: . 
If Maine Taxable income is: 
Less than $8,400 
At least $ 8,400 but less than $16,700 
At least $16,700 but less than $33,400 
$33,400 or more 
The tax is: 
2% of the Maine taxable income 
$168 plus 4.5% of the excess over $8,400 
$542 plus 7% of the excess over $16,700 
$1,711 plus 8.5% ofthe excess oVer 
$33,400 
Sec. 10. 36 MRSA §S111, sub-§3-C is enacted to read: 
3-C. Individuals filing married joint return or survlvmg spouses; tax years 
beginning in 2009. For tax years heginning on or after January 1, 2009 but before 
January 1, 2010, for individuals filing married joint returns or sw-Viving spouses 
permitted to file a joint return: 
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If Maine Taxable income is: 
$9,750 or less 
More than $9,750 but less than $19,450 
At least $19,450 but less than $38,900 
$38,900 or more 
The tax is: 
% ofthe Maine taxable income 
$98 plus 3.5% ofthe excess over $9,750 
$437 plus 6% of the excess over $19,450 
$1,604 plus 7.5% ofthe excess· over 
$38,900 
Sec. 11. 36.MRSA §S111, sub-§3-D is enacted to read: 
3-D. Individuals filing married joint return or surVlvmg spouses; tax years 
beginning in 2010. For tax years beginning on or after January 1, 2010 but before 
January 1, 2011, for individuals filing married joint returns or surviving spouses 
permitted to file a joint return: 
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If Maine Taxable income is: 
$9,750 or less 
More than $9,750 but less than $19,450 
At least $19,450 but less than $38,900 
$38,900 or more 
The tax is: 
$0 
2% of the excess over $9,750 
$194 plus 4.5%ofthe.excess over $19,450 
$1,069 plus 6% of the excess over $38,900 
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Sec. 12. 36 MRSA §5111,sub-§3-E is enacted to read:. 
3-E. Individuals filing married joint return or survIVlllg spouses; tax years 
beginning 2011. For tax years beginning on or after January 1, 2011, for individuals 
filing married joint returns or surviving spouses permitted.to file a joint return: 
If Maine Taxable income is: 
The tax is: 
$9,750 or less 
$0 
More than $9,750 but less than $19,450 
0.5% of the excess over $9,750 
At least $19,450 but less than $38,900 
$48 plus 3% of the excess over $19,450 
$38,900 or more 
$632 plus 4.5% of the excess over $38,900 
Sec. 13. 36 MRSA §5200, sub-§1, as amended by PL 2005, c~ 618, §6 and 
affected by §22, is further amended to read: 
1. Imposition and rate of tax; tax years ending before 2009. A For tax years 
ending before January 1, 2009, a tax is imposed for each taxable year at the foHowing 
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rates on each taxable corporation and on each group of corporations that derives income 
from a unitary business carried on by 2 or more members of an affiliated group: 
If the income is: 
Not over $25,000 
$25,000 but not over $75,000 
. $75,000 but not over $250,000 . 
$250,000 or more 
The tax is: 
3.5% .ofthe income 
$875 plus 7.93% of the excess over 
$25,000 
$4,840 plus 8.33% of the excess over 
$75,000 
.$19,418 plus 8.93% of the excess over 
$250,000 
In the case of an affiliated group of corporations engaged in a unitary business with 
activity taxable only by Maine, the rates provided in this subsection are applied only to 
the first $250,000 of the Maine net income of the entire group and must be apportioned 
equally among the taxable corporations unless those taxable corporations jointly elect a 
different apportionment. The balance of the Maine net income of the entire group istaxed 
at 8.93%. 
In .the case of an affiliated group of corporations engaged in a unitary business with 
activity taxable both within and without this State, the rates provided in this subsection 
are applied only to the first $250,000 of the net income of the entire group and must be 
apportioned equally among the taxable corporations unless ·those taxable corporations 
jointly elect a different apportionment. The balance of the net income of the entire group 
is taxed at 8 .. 93%. 
Sec. 14. 36 MRSA §5200, sub-§1-A is enacted to read: 
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I-A. 
Imposition and rate of tax; tax years beginning 2009. 
For tax years 
beginning in 2009, a tax is imposed for each taxable year at the following rates on each 
taxable corporation and on each group of corporations that derives income from a unitary 
business carried on by 2 or more members of an affiliated group: 
If the income is: 
The tax is: 
Not over $25;000 
2.5% of the income 
$25,000 but not over $75,000 
$625 plus 6.93% of the excess· over 
$25,000 
$75,000 but not over $250,000 
$250,000 or more 
$4,090 plus 7.33% of the excess over 
$75,000 
$16,918 plus 7.93% of the excess over 
$250,000 
In. the case of an affiliated group of corporations engaged in a unitary business with 
activity taxable only by Maine, the rates provided in this subsection are applied only to 
the first $250,000 of the Maine net income of the entire group and must be apportioned 
equally among the taxable corporations unless those taxable corporations jointly elect a 
different apportionment. The balance of the Maine net income of the entire group is taxed 
at 7.93%. 
In the case of an affiliated group of corporations engaged in a unitary business with 
activity taxable both within and without this State, the rates provided in this subsection 
are applied only to the first $250,000 of the net income of the entire group and must be 
apportioned equally among the ta~able corporations unless those taxable corporations 
jointly elect a different apportionment. The balance of the net income of the entire group 
is taxed at 7.93%. 
Sec. 15. 36 MRS A §5200, sub-§I-B is enacted to read: 
I-B. 
Imposition and rate of tax; tax years beginning. 2010. 
For tax· years 
beginning in 20lO,·a tax is imposed for each taxable year at the following rates on each 
taxable corporation and on each group of corporations that derives income from a unitary 
business carried on by 2 or more members of an affiliated group: 
If the income is: 
Not over $25,000 
$25,000 but not over $75,000 
$75,000 but not over $250,000 
$250,000 or more 
The tax is: 
% of the income 
$250 plus 5.43% ofthe excess over 
$25,000 
$2,965 plus 5.83% of the excess over 
$75,000 
$13,168 plus 6.43% of the excess over 
$250,000 
In the case of an affiliated group of corporations engaged in a unitary business with 
activity taxable only by Maine, the rates provided in this subsection are applied only to 
the first $250,000 of the Maine net income of the entire group and must be apportioned 
equally among the taxable corporations unless those taxable corporations jointly elect a 
different apportionment. The balance of the Maine net income of the entire group is taxed 
at 6.43%. 
In the case of an affiliated group of corporations· engaged in a unitary business with 
activity taxable both within and without this State, the rates provided in this subsection 
are applied only to the first $250,000 of the net income of the entire group and must be 
apportioned equally among the taxable corporations unless those taxable corporations· 
jointly elect a different apportionment. The balance of the net income of the entire group 
is taxed at 6.43%. 
Sec. 16. 36 MRSA §5200, sub-§l-C is enacted to read: 
I-C. Imposition and rate of tax; tax years beginning 2011 or after. For tax years 
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beginning on or after January 1, 2011, a tax is imposed for each taxable year at the 
following rates on each taxable- corporation and on each group of corporations that 
derives income from a unitary business carried on by 2 or more members of an affiliated 
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If the income is: 
Not over $25,000 
$25,000 but not over $75,000 
$75,000 but not over $250,000 
$250,000 or more 
The tax is: 
$0 
3.93% of the excess over $25,000 
$1,965 plus 4.33% of the excess over 
$75,000 
$9,543 plus 4.93% of the excess over 
$250,000 
In the case of an affiliated· group of coiporations engaged in a unitary business with 
activity tax~ble only by Maine, the rates provided in this subsection are applied only to 
the first $250,000 of the Maine net income of the entire group and must be apportioned 
equally among the taxable corporations unless those taxable corporations jointly elect a 
different apportionment. The balance of the Maine net income of the entire group is taxed . 
at 4.93%. 
In the case of an affiliated group of corporations engaged in a unitary business with 
activity taxable both within and without this State, the rates provided in this subsection 
are applied only to the first $250,000 of the net income of the entire group and must be 
apportioned equally among the taxable corporations unless those taxable corporations 
jointly elect a different apportionment. The balance of the net income of the entire group 
is taxed at 4.93%. 
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Sec. 17. 36 MRSA §5203-B, as amended by PL 2003, c. 673, Pt. n, §2 and 
affected by §6, is further amended to read: 
§5203-B. Corporate income tax surcharge 
In addition to the tax liability otherwise established by this Part, a tax surcharge of 
10% of the total amount of state tax liability established by sections section 5200 and 
former section 5203-C is imposed on taxable corporations for tax years beginning in 1991 
. or 1992. 
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Sec. 18. 36 MRSA §5203-C, as amended by PL 2005, c. 618, §§7 and 8 and 
affected by §22, is repealed. 
Sec. 19. 36 MRSA §5217-A, as amended by PL 2003, c. 673, Pt. JJ, §4 and 
affected by §6, is further amended to read: 
§5217-A. Income tax paid to other taxing jurisdiction 
A resident individual is allowed a credit against the tax otherwise due under tills Part, 
excluding the tax imposed by section 5203 C, for the amount of income tax imposed on 
that individual for the taxable year by another state of the United States, a political 
subdivision of any such state, the District of Columbia Qr any political subdivision of a 
foreign country that is analogous to a state of the United States with respect to income 
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subject to tax under this Part that is derived from sources in that taxing jurisdiction. In 
determining whether income is derived from sources in another jurisdiction, the assessor 
may not employ the law of the other jurisdiction but shall instead assume that a statute 
equivalent to section 5142 applies in that jurisdiction. The credit, for any of the specified 
taxing jurisdictions, may not exceed the proportion of the tax otherwise due under this 
Part, eJec1uding the tax imposed by section 5203 C,· that the amount of the taxpayer's 
. Maine adjusted gross income derived from sources in that taxing jurisdiction bears to the 
taxpayer's entire Maine adjusted gross income; except that, when a credit is claimed for 
taxes paid to both a state and a political subdivision of a state, the total credit allowable 
for those taxes does not exceed the proportioll of th~ tax otherwise due under tills Part, 
eJecl"uding the tm~ imposed by section 5203 C, that the amount of the taxpayer's Maine 
adjusted gross· income derived from sources in the other state bears to the taxpayer's 
entire Maine adjusted gross income: 
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Sec. 20. 36 MRSA §5219:-H, as repealed and replaced by PL 2003, c. 673, Pt. F, 
§ 1 and affected by §2, is further amended to read: 
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§5219-H. Application of credits against taxes 
1. Meaning of tax. Whenever a credit provision in chapter 822, other than section 
5219-W, allows for a credit "against the tax otherwise due under this Part," "against the 
tax imposed ·by this Part" or similar language, "tax" means all taxes under this Part, 
except the minimum tax imposed by section 5203 C and the taxes imposed by chapter 
.827. 
2. Meaning of tax liability. Whenever a credit provided for in chapter 822 is 
limited by reference to tax liability, "tax liability" means the tax iiability for all taxes 
under tills Part, except the mirumum tmc imposed by section 5203 C and the taxes 
imposed by chapter 827. 
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Sec. 21. 36 MRSA §5219-N, sub-§2, ~A, as enacted by PL 1997, c. 557, Pt. E, 
§ 1 and affected by§ 2 and Pt. G, § 1, is amended to read: 
A. An individual who is claimed· asa dependent on another individual's income tax 
retum;-aoo-,-
Sec. 22. 36 MRSA §5219-N, sub-§2, €[B, as amended by PL 2003, c.673, Pt. JJ, 
§5 and affected by §6, is repealed. 
Sec. 23. 36 MRSA §5403, as repealed and replaced by PL 1999, c. 731, Pt. T,§ 1 0 
and affected by § 11, is amended to read: 
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§5403. " Annual adjustments for inflation 
Beginning in 2002, and each subsequent calendar year thereafter, on or about 
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September 15th, the State Tax Assessor shall multiply the cost~of-living adjustment for 
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taxable years beginning in the succeeding calendar year by the dollar amounts of the tax 
rate tables specified in section 5111, subsections -l-B, 2E and 3 B to 3-E., If the dollar 
amounts of each rate bracket, adjusted by application of the cost-of-living adjustrl).ent,. 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. 24. Application. This Act applies to tax years beginning on or after January 
1,2009. 
SUMMARY 
This bill reduces over a 3-year period the income tax rates imposed on individuals 
arid corporations. For tax years beginning in 2009, the tax rates are reduced by one 
percenta"ge point; in tax year 2010, by another point and a half; and in 2011 by another 
point and a half. 
The effect of these reductions is that, beginning with tax years 
beginning on or after January 1, 2011, for individuals, income now taxed at the rate of 
2% will not. be taxed; income "taxed at the rate of 4.5% will be taxed at the rate of 0.5%; 
income taxed at the rate of 7% will be taxed at the rate of 3%; and income taxed at the 
rate of 8.5% will be taxed at the rate of 4.5%. 
For corporations, beginnlng with tax years beginning on or after January 1, 2011, 
income of $25,000 or less will n6t be taxed; income of $25,000 to $75,000 now taxed at 
the rate of 7.9~% will be taxed at the rate of 3.93%; income of $75,000 to $250,000 now 
taxed at the rate of 8.33% will be taxed at the rate of 4.33%; and income of more than 
$250,000 now taxed at the rate of 8.93% will be taxed at the rate of 4.93%. 
This bill also eliminates the state alternative minimum tax. 
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