An Act to Abolish the Maine Income Tax and Establish a Zero-based Budget
Maine Legislature, Session 131, LD 1434
Committee: Taxation
Sponsors: LIBBY, BRAKEY, DUNPHY, PAUL, PERKINS, SMITH, WHITE
Amends: 5 MRSA §1662

Legislative Document
No. 1434
H.P. 930
House of Representatives, March 30, 2023
An Act to Abolish the Maine Income Tax and Establish a Zero-
based Budget
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative LIBBY of Auburn.
Cosponsored by Senator BRAKEY of Androscoggin and
Representatives: DUNPHY of Embden, PAUL of Winterport, PERKINS of Dover-Foxcroft, 
SMITH of Palermo, WHITE of Guilford.
Be it enacted by the People of the State of Maine as follows:
PART A
Sec. A-1.  36 MRSA c. 843 is enacted to read:
CHAPTER 843
INCOME TAX ELIMINATION
§5501.  Elimination of income tax
For tax years beginning on or after January 1, 2026, no tax may be collected under this 
Part.
Sec. A-2. Department of Administrative and Financial Services review and 
report; references to income tax.  The Department of Administrative and Financial 
Services shall review the provisions of the Maine Revised Statutes that refer to Maine 
income tax and submit a report, including suggested legislation, to the Second Regular 
Session of the 131st Legislature identifying any changes necessary to implement this Act.
PART B
Sec. B-1.  5 MRSA §1662, sub-§1-B is enacted to read:
1-B.  State budget document.  For biennial budget documents for fiscal years 2025-
and 2026-27, the budget document must be prepared and submitted using a budget 
process that includes zero-based budgeting for each department and other agency in the 
Executive, Legislative and Judicial Departments of State Government at least once every 
years. For the purposes of this section, "zero-based budgeting" means a method of 
budgeting in which programs and activities are justified for a budgetary period using cost-
benefit analysis without regard to the amount that was budgeted for those programs and 
activities in a prior budgetary period.
Sec. B-2. Budget provisions review.  By January 1, 2024, the Department of 
Administrative and Financial Services shall review the provisions of the Maine Revised 
Statutes, Title 5, chapter 149 and submit legislation to the Second Regular Session of the 
131st Legislature making necessary changes to statute to facilitate the submission of a 
budget for fiscal years 2025-26 and 2026-27 that includes zero-based budgeting based on 
the following conditions:
1.  Establishing a zero-based budgeting system in which each agency is required to use 
a zero-based budgeting format every 8 years;
2. Establishing a system for periodic agency review with the biennial budget;
3. Establishing targeted budgeting or a similar alternative budgeting system for 
agencies for budget submissions during years when the agency is not submitting a zero-
based budget; and
4. Requiring the provision of alternative funding and budget recommendations for 
agencies that, at a minimum, require recommendations from each agency outlining 5% and 
10% funding reduction proposals during years when the agency is not submitting a zero-
based budget.
SUMMARY
This bill eliminates the Maine income tax beginning January 1, 2026. It requires the 
Department of Administrative and Financial Services to review provisions of law that refer 
to income tax and submit a report, including suggested legislation, to the Second Regular 
Session of the 131st Legislature identifying necessary changes to implement the 
elimination. The bill also requires the development of a new budgeting system in which 
agencies would be subject to zero-based budgeting every 8 years and in the interim years 
be subject to review and alternative budget requirements.