An Act To Simplify and Expand the Educational Opportunity Tax Credit
Maine Legislature, Session 127, LD 1657
Committee: Taxation
Sponsors: ALFOND
Amends: 36 MRSA §5217-D

Legislative Document 
No. 1657 
S.P. 678 
In Senate, March 16, 2016 
An Act To Simplify and Expand the Educational Opportunity Tax 
Credit 
Reference to the Committee on Taxation suggested and ordered printed. 
HEATHER J.R. PRIEST 
Secretary of the Senate 
Presented by Senator ALFOND of Cumberland.  (GOVERNOR'S BILL) 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  36 MRSA §5217-D, sub-§1, ¶B-1, as amended by PL 2015, c. 300, Pt. 
A, §42 and amended by c. 328, §5, is repealed and the following enacted in its place: 
B-1.  "Financial aid package" means financial aid obtained by a student for 
attendance at an accredited Maine community college, college or university. For 
purposes of a qualified individual claiming a credit under this section for tax years 
beginning on or after January 1, 2013 but before January 1, 2016 who is eligible for a 
credit under paragraph G, subparagraph (1), division (a), "financial aid package" may 
include financial aid obtained for up to 30 credit hours of course work at an 
accredited non-Maine community college, college or university earned prior to 
transfer to an accredited Maine community college, college or university, if the 30 
credit hours were earned after December 31, 2007 and the transfer occurred after 
December 31, 2012.  For purposes of a qualified individual claiming a credit under 
this section for tax years beginning on or after January 1, 2016 who is eligible for a 
credit under paragraph G, subparagraph (1), division (a-1), "financial aid package" 
may include financial aid obtained by a student for attendance at an accredited non-
Maine community college, college or university after December 31, 2007.  For 
purposes of a qualified individual claiming a credit under this section for tax years 
beginning on or after January 1, 2016 who is eligible for a credit under paragraph G, 
subparagraph (1), division (b), "financial aid package" may include financial aid 
obtained by a student for attendance at an accredited non-Maine community college, 
college or university after December 31, 2007. For purposes of a qualified individual 
claiming a credit under this section for tax years beginning on or after January 1, 
2016 who is eligible for a credit under paragraph G, subparagraph (1), division (c), 
"financial aid package" may include financial aid obtained by a student for attendance 
at an accredited Maine college or university after December 31, 2007. For purposes 
of an employer claiming a credit under this section for tax years beginning on or after 
January 1, 2013, "financial aid package" may include financial aid obtained by a 
qualified employee for attendance at an accredited non-Maine community college, 
college or university. "Financial aid package" may include private loans or less than 
the full amount of loans under federal programs, depending on the practices of the 
accredited Maine or non-Maine community college, college or university. Loans are 
includable in the financial aid package only if entered into prior to July 1, 2023. 
Sec. 2.  36 MRSA §5217-D, sub-§1, ¶E, as amended by PL 2013, c. 525, §15, is 
further amended to read: 
E.  "Qualified employee" means an employee who is employed at least part time and 
who is a qualified individual or who would be a qualified individual except that the 
employee's associate or bachelor's degree was awarded by an accredited non-Maine 
community college, college or university. 
For tax years beginning on or after January 1, 2016, "qualified employee" means an 
employee who is employed at least part time and who is a qualified individual or who 
would be a qualified individual except that the employee's associate, bachelor's or 
graduate degree was awarded by an accredited non-Maine community college, 
college or university. 
Sec. 3.  36 MRSA §5217-D, sub-§1, ¶G, as amended by PL 2015, c. 328, §6, is 
further amended to read: 
G.  "Qualified individual" means an individual, including the spouse filing a joint 
return with the individual under section 5221, who is eligible for the credit provided 
in this section.  An individual is eligible for the credit if the individual: 
(1)  Attended and obtained: 
(a)  An associate or bachelor's degree from an accredited Maine community 
college, college or university after December 31, 2007 but before January 1, 
2016.  The individual need not obtain the degree from the institution in which 
that individual originally enrolled as long as all course work toward the 
degree is performed at an accredited Maine community college, college or 
university, except that an individual who transfers to an accredited Maine 
community college, college or university after December 31, 2012 but before 
January 1, 2016 from outside the State and earned no more than 30 credit 
hours of course work toward the degree at an accredited non-Maine 
community college, college or university after December 31, 2007 and prior 
to the transfer is eligible for the credit if all other eligibility criteria are met.  
Program eligibility for such an individual must be determined as if the 
commencement of course work at the relevant accredited Maine community 
college, college or university was the commencement of course work for the 
degree program as a whole.  This division does not apply to tax years 
beginning after December 31, 2015; 
(a-1)  For tax years beginning on or after January 1, 2016, an associate or 
bachelor's degree from an accredited Maine community college, college or 
university after December 31, 2007 but before January 1, 2016, regardless of 
whether the individual earned credit hours of course work toward the degree 
outside the State; 
(b)  An associate or bachelor's degree from an accredited Maine or non-
Maine community college, college or university after December 31, 2015; or 
(c)  A graduate degree from an accredited Maine college or university after 
December 31, 2015; 
(4)  During the taxable year, was a resident individual; and 
(5)  Worked during the taxable year: 
(a)  For tax years beginning prior to January 1, 2015, at least part time for an 
employer located in this State or, for tax years beginning on or after January 
1, 2013, was, during the taxable year, deployed for military service in the 
United States Armed Forces, including the National Guard and the Reserves 
of the United States Armed Forces; or 
(b)  For tax years beginning on or after January 1, 2015, at least part time in 
this State for an employer or as a self-employed individual or was, during the 
taxable year, deployed for military service in the United States Armed 
Forces, including the National Guard and the Reserves of the United States 
Armed Forces.; or 
(c)  For tax years beginning on or after January 1, 2016, at least part time in a 
position on a vessel at sea. 
As used in this subparagraph, "deployed for military service" has the same 
meaning as in Title 26, section 814, subsection 1, paragraph A. 
Sec. 4.  36 MRSA §5217-D, sub-§5, as amended by PL 2013, c. 525, §15, is 
further amended to read: 
5.  Calculation of the credit; employers.   Subject to subsection 2, a taxpayer 
constituting an employer making loan payments directly to a lender during the taxable 
year on loans included in a qualified employee's financial aid package may claim a credit 
equal to the benchmark loan payment or the actual monthly loan payment made by the 
employer on the loans, whichever is less, multiplied by the number of months during the 
taxable year the employer made loan payments on behalf of the qualified employee 
during the term of employment.  For tax years beginning on or after January 1, 2016, 
subject to subsection 2, a taxpayer constituting an employer making loan payments 
directly to a lender during the taxable year on loans included in a qualified employee's 
financial aid package may claim a credit equal to the actual monthly loan payment made 
by the employer on the loans multiplied by the number of months during the taxable year 
the employer made loan payments on behalf of the qualified employee during the term of 
employment.  The credit under this subsection may not be claimed with respect to months 
of the taxable year during which the employee was not a qualified employee. 
If the qualified employee is employed on a part-time basis during the taxable year, the 
credit with respect to that employee is limited to 50% of the credit otherwise determined 
under this subsection. 
SUMMARY 
This bill, for tax years beginning on or after January 1, 2016, allows a qualified 
individual who earned a bachelor's or associate degree from an accredited Maine 
community college, college or university after December 31, 2007 but before January 1, 
2016 to be eligible for the educational opportunity tax credit regardless of the number of 
transfer credits earned at a non-Maine community college, college or university.  Under 
current law, an individual who earned more than 30 credit hours from a non-Maine 
community college, college or university prior to 2016 does not qualify for the credit. 
The bill, for tax years beginning on or after January 1, 2016, allows a resident of 
Maine who is employed at least part time in a position on a vessel at sea to qualify for the 
educational opportunity tax credit.  Under current law, an individual, other than an 
individual deployed for military service, does not qualify for the credit if the individual 
works outside Maine for more than 3 months. 
The bill, for tax years beginning on or after January 1, 2016, encourages employers to 
pay student loan payments by expanding the employer credit to include graduate degrees 
earned by qualified employees and by removing the principal cap relative to qualified 
employees.