An Act To Replace the Educational Opportunity Tax Credit with the Student Loan Repayment Credit for Maine Residents
Maine Legislature, Session 128, LD 1537
Committee: Taxation
Sponsors: POULIOT, DOW, HILLIARD, STANLEY
Amends: 20-A MRSA §12541, 36 MRSA §5217-D, 36 MRSA §5217-E

Legislative Document
No. 1537
H.P. 1057
House of Representatives, April 25, 2017
An Act To Replace the Educational Opportunity Tax Credit with 
the Student Loan Repayment Credit for Maine Residents
Submitted by the Department of Administrative and Financial Services pursuant to Joint 
Rule 204.
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative POULIOT of Augusta.
Cosponsored by Senator DOW of Lincoln and
Representatives: HILLIARD of Belgrade, STANLEY of Medway.
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  20-A MRSA §12541, sub-§4, as enacted by PL 2007, c. 469, Pt. A, §1, is 
amended to read: 
4.  Educational opportunity tax credit.  "Educational opportunity tax credit" means 
the tax credit provided for in Title 36, section 5217-D, except that for tax years beginning 
on or after January 1, 2017, "educational opportunity tax credit" means the tax credit 
provided for in Title 36, section 5217-E. 
Sec. 2.  20-A MRSA §12541, sub-§8, as enacted by PL 2013, c. 525, §5, is 
amended to read: 
8.  Qualified employee.  "Qualified employee" has the same meaning as in Title 36, 
section 5217-D, subsection 1, paragraph E, except that for tax years beginning on or after 
January 1, 2017, "qualified employee" has the same meaning as in Title 36, section 
5217-E, subsection 1, paragraph H. 
Sec. 3.  20-A MRSA §12541, sub-§9, as enacted by PL 2013, c. 525, §6, is 
amended to read: 
9.  Qualified individual.  "Qualified individual" has the same meaning as in Title 36, 
section 5217-D, subsection 1, paragraph G, except that for tax years beginning on or after 
January 1, 2017, "qualified individual" has the same meaning as in Title 36, section 
5217-E, subsection 1, paragraph I. 
Sec. 4.  36 MRSA §5217-D, sub-§6 is enacted to read: 
6.  Application.  Except for the credit allowed with respect to the carry-over of 
unused credit amounts pursuant to subsection 2, paragraph A, the credit allowed under 
this section does not apply to tax years beginning on or after January 1, 2017. 
Sec. 5.  36 MRSA §5217-E is enacted to read: 
§5217-E.  Credit for student loan repayment 
For tax years beginning on or after January 1, 2017, a Maine resident individual is 
allowed a credit for student loan repayments as computed under this section against the 
taxes imposed under this Part. 
1.  Definitions.  As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A.  "Accredited Maine community college, college or university" has the same 
meaning as in Title 20-A, section 12541, subsection 1. 
B.  "Accredited non-Maine community college, college or university" means an 
institution located outside the State that is accredited by a regional accrediting 
association or by one of the specialized accrediting agencies recognized by the 
United States Secretary of Education. 
C.  "Education loan payment" means a loan payment paid during the taxable year for 
eligible education loans. 
D.  "Eligible education loan" means a loan obtained by a qualified individual for 
attendance by that qualified individual at an accredited Maine or non-Maine 
community college, college or university to obtain an associate, bachelor's or 
graduate degree after 2007.  "Eligible education loan" includes a refinanced loan or 
consolidated loan if the refinanced loan or consolidated loan remains separate from 
other debt, except for debt incurred in an educational program, but only in proportion 
to the portion of the loan payment that is otherwise eligible under this section.  
"Eligible education loan" does not include a loan obtained from a person related to 
the qualified individual or from any person by reason of a loan under any qualified 
employer plan or under a contract referred to in the Code, Section 72(p)(5).  For 
purposes of this paragraph, a person is considered related to the qualified individual if 
that person meets the criteria listed in the Code, Section 267(b) or Section 707(b)(1).  
As used in this paragraph, "qualified employer plan" has the same meaning as in the 
Code, Section 72(p)(4)(A). 
E.  "Employer" has the same meaning as the term "employing unit," as defined in 
Title 26, section 1043, subsection 10. 
F.  "Part time," as that term refers to employment, means employment that on average 
during the taxable year consists of a workweek of at least 16 hours, but less than 32 
hours. 
G.  "Qualified employee" means an employee who is employed at least part time and 
who is a qualified individual. 
H.  "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 an associate, bachelor's or graduate degree from an 
accredited Maine or non-Maine community college, college or university after 
2007; 
(2)  Was a resident individual for the entire taxable year; and 
(3)  Either: 
(a)  Worked during the taxable year: 
(i)  At least part time in this State for an employer or as a self-employed 
individual; or 
(ii)  At least part time in a position on a vessel at sea; or 
(b)  Was deployed for military service in the United States Armed Forces, 
including the National Guard and the Reserves of the United States Armed 
Forces.  As used in this division, "deployed for military service" has the same 
meaning as in Title 26, section 814, subsection 1, paragraph A. 
I.  "Resident individual" means an individual: 
(1)  Who is domiciled in this State; or 
(2)  Who is not domiciled in this State, but maintains a permanent place of abode 
in this State and spends in the aggregate more than 183 days of the taxable year 
in this State, unless the individual is a member of the Armed Forces of the United 
States. 
J.  "Seasonal employment" has the same meaning as in Title 26, section 1251 and in 
rules adopted pursuant to that section. 
K.  "Term of employment" includes all months when the individual is actually 
employed and includes time periods when an individual is on leave or vacation. It 
extends to the full year for individuals working for employers that customarily 
operate only during a regularly recurring period of 9 months or more during the 
taxable year. For individuals working for employers that customarily operate only 
during regularly recurring periods of less than 9 months during the taxable year, 
including seasonal employment, the term of employment extends only to months 
during which the individual is actually working. 
2.  Credit allowed.  A qualified individual or an employer of a qualified employee is 
allowed a credit against the tax imposed by this Part in accordance with the provisions of 
this section. The credit is created to implement the Job Creation Through Educational 
Opportunity Program established under Title 20-A, chapter 428-C. 
A.  A taxpayer may claim a credit based on loan payments actually made to a relevant 
lender or lenders under this section only with respect to eligible education loan 
payment amounts paid by the taxpayer during that part of the taxable year that the 
qualified individual worked in this State. Payment of loan amounts in excess of the 
amounts due during the taxable year does not qualify for the credit. Forbearance or 
deferment of loan payments does not affect eligibility for the credit under this 
section. An individual who worked in this State for any part of a month of the taxable 
year is considered to have worked in this State for the entire month. 
B.  The credit under this section may not reduce the tax otherwise due under this Part 
to less than zero.  
3.  Calculation of the credit; qualified individuals.  Subject to subsection 2, the 
credit with respect to a qualified individual is equal to the lesser of: 
A.  The monthly payment amount made on eligible education loans multiplied by the 
number of months during the taxable year in which the taxpayer made payments on 
eligible education loans; and 
B.  The greatest of $1,000 if the qualified individual obtained an associate degree, 
$2,000 if the qualified individual obtained a bachelor's degree and $3,000 if the 
qualified individual obtained a graduate degree. 
4.  Calculation of the credit; employers.  Subject to subsection 2, a taxpayer 
constituting an employer making payments on eligible education loans directly to a lender 
during the taxable year on behalf of a qualified employee 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 the 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 makes the current tax credit for educational opportunity inapplicable to tax 
years beginning on or after January 1, 2017 and creates a new simplified tax credit for 
student loan repayment applicable to tax years beginning on or after January 1, 2017.  
The credit, available to qualified individuals, is equal to the amount of eligible education 
loan payments made during the tax year, up to the greatest of $1,000 for individuals 
having obtained an associate degree, $2,000 for individuals having obtained a bachelor's 
degree and $3,000 for individuals having obtained a graduate degree. A qualified 
individual must be a full-year Maine resident who has obtained an associate, bachelor's or 
graduate degree from an accredited Maine or non-Maine community college, college or 
university after 2007 and who works at least part time in Maine or on a vessel at sea or is 
deployed for military service in the United States Armed Forces during the taxable year.  
Loans obtained from related persons, such as family members and certain businesses, 
trusts and exempt organizations, do not qualify for the credit.  The credit may not reduce 
the tax due to less than zero. The credit for employers of qualified employees is equal to 
the amount of eligible education loan amounts paid during the taxable year, except that 
the credit attributable to part-time employees is limited to 50% of the credit otherwise 
determined.