An Act to Enact a Seasonal Sales Tax to Provide Income Tax Relief to Maine Residents
Maine Legislature, Session 131, LD 1445
Committee: Taxation
Sponsors: FAULKINGHAM, BOYER, CARMICHAEL, GALLETTA, HEPLER, LANIGAN, PERRY
Amends: 5 MRSA §1518-B, 36 MRSA §1811, 36 MRSA §5213-A

Legislative Document
No. 1445
H.P. 941
House of Representatives, March 30, 2023
An Act to Enact a Seasonal Sales Tax to Provide Income Tax Relief 
to Maine Residents
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative FAULKINGHAM of Winter Harbor.
Cosponsored by Representatives: BOYER of Poland, CARMICHAEL of Greenbush, 
GALLETTA of Durham, HEPLER of Woolwich, LANIGAN of Sanford, PERRY of Bangor.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  5 MRSA §1518-B is enacted to read:
§1518-B.  Maine Residents Income Tax Relief Fund
1.  Maine Residents Income Tax Relief Fund established; purpose.  The Maine 
Residents Income Tax Relief Fund, referred to in this section as "the fund," is established 
to provide relief from income taxes imposed on residents of this State, as described in this 
subsection.
A.  Beginning in fiscal year 2024-25, all resources appropriated to the fund must be 
used to increase the personal exemption amount authorized pursuant to Title 36, section 
5126-A.  The State Tax Assessor shall annually determine the amount of the increase 
rounded down to the nearest $50 and as limited by paragraph B.  If any increase is 
made, it is effective for the current taxable year and must be incorporated into the 
income tax forms and instructions of the State Tax Assessor for that taxable year.  Any 
increase pursuant to this section must be determined before the adjustments authorized 
in Title 36, section 5403, subsections 7 and 8.
B.  The adjustment required pursuant to paragraph A may not be made if it would result 
in a personal exemption amount higher than that allowed for federal tax purposes.
C.  If the amount of an increase in the personal exemption pursuant to paragraph A 
would result in a personal exemption amount higher than that allowed for federal tax 
purposes, the State Tax Assessor shall report that fact to the joint standing committee 
of the Legislature having jurisdiction over taxation matters.  The joint standing 
committee of the Legislature having jurisdiction over taxation matters may report out 
legislation that provides a method different than that specified in paragraph A of 
providing tax relief to residents of the State using the resources transferred to the fund.
2.  Transfers to the Maine Residents Income Tax Relief Fund.  Notwithstanding 
any provision of law to the contrary, the State Controller shall transfer to the Maine 
Residents Income Tax Relief Fund all revenue generated by the seasonal sales tax imposed 
pursuant to Title 36, section 1811, subsection 3.
3.  Nonlapsing fund.  Any unexpended balance in the Maine Residents Income Tax 
Relief Fund may not lapse, but must be carried forward to be used pursuant to subsection 
1.
Sec. 2.  36 MRSA §1811, sub-§3 is enacted to read:
3.  Seasonal sales tax.  Beginning in 2024, in addition to the 5.5% tax imposed 
pursuant to subsection 1, paragraph D, for sales occurring during the period starting with 
the last Monday in May until the 2nd Monday in October, an additional tax at the rate of 
2% is imposed on the value of all tangible personal property and taxable services.  The tax 
imposed pursuant to this subsection applies only to those sales of personal property and 
services subject to the 5.5% tax.
Notwithstanding Title 30-A, section 5681 or any other provision of law to the contrary, all 
revenue from the tax imposed pursuant to this subsection must be deposited in the Maine 
Residents Income Tax Relief Fund established in Title 5, section 1518-B to be used for the 
purposes stated in Title 5, section 1518-B, subsection 1.
Sec. 3.  36 MRSA §5213-A, sub-§1, ¶A-1, as enacted by PL 2017, c. 474, Pt. B, 
§9, is amended to read:
A-1.  For tax years beginning on or after January 1, 2018 and before January 1, 2024, 
"base credit" means:
(1)  For single individuals, $125;
(2)  For individuals filing joint returns or as heads of households, $175 plus an 
additional amount equal to:
(a)  For individuals filing joint returns, $25 if they can claim the federal child 
tax credit pursuant to the Code, Section 24 for no more than one qualifying 
child or dependent or $50 if they can claim the credit for more than one 
qualifying child or dependent; or
(b)  For individuals filing as heads of households, $25 if they can claim the 
federal child tax credit pursuant to the Code, Section 24 for 2 qualifying 
children or dependents or $50 if they can claim the credit for more than 2 
qualifying children or dependents.
Sec. 4.  36 MRSA §5213-A, sub-§1, ¶A-2 is enacted to read:
A-2.  For tax years beginning on or after January 1, 2024, "base credit" means:
(1)  For single individuals, $185;
(2)  For individuals filing joint returns or as heads of households, $235 plus an 
additional amount equal to:
(a)  For individuals filing joint returns, $40 if they can claim the federal child 
tax credit pursuant to the Code, Section 24 for no more than one qualifying 
child or dependent or $65 if they can claim the credit for more than one 
qualifying child or dependent; or
(b)  For individuals filing as heads of households, $40 if they can claim the 
federal child tax credit pursuant to the Code, Section 24 for 2 qualifying 
children or dependents or $65 if they can claim the credit for more than 2 
qualifying children or dependents.
Sec. 5.  36 MRSA §5213-A, sub-§4, as enacted by PL 2015, c. 267, Pt. DD, §19, 
is amended to read:
4.  Phase-out of credit.  The Until tax years beginning January 1, 2024, the credit 
allowed under this section is phased out as follows.
A.  For single individuals, the credit is reduced by $10 for every $500 or portion thereof 
that exceeds $20,000 of the income.
B.  For unmarried individuals or legally separated individuals who qualify as heads of 
households, the credit is reduced by $15 for every $750 or portion thereof that exceeds 
$30,000 of the income.
C.  For individuals filing married joint returns or surviving spouses permitted to file 
joint returns, the credit is reduced by $20 for every $1,000 or portion thereof that 
exceeds $40,000 of the income.
Sec. 6.  36 MRSA §5213-A, sub-§4-A is enacted to read:
4-A.  Phase-out of credit.  For tax years beginning on or after January 1, 2024, the 
credit allowed under this section is phased out as follows.
A.  For single individuals, the credit is reduced by $10 for every $500 or portion thereof 
that exceeds $30,000 of the income.
B.  For unmarried individuals or legally separated individuals who qualify as heads of 
households, the credit is reduced by $15 for every $750 or portion thereof that exceeds 
$45,000 of the income.
C.  For individuals filing married joint returns or surviving spouses permitted to file 
joint returns, the credit is reduced by $20 for every $1,000 or portion thereof that 
exceeds $60,000 of the income.
SUMMARY
This bill makes the following changes to the laws regarding the sales tax.
1.  It enacts an additional seasonal sales tax of 2%, imposed annually between 
Memorial Day and Indigenous Peoples Day beginning in 2024.  The tax is imposed only 
on those items or services that are subject to the current 5.5% sales tax.
2.  Revenue from the seasonal sales tax is deposited, without any subtractions, into the 
new Maine Residents Income Tax Relief Fund.  The purpose of the fund is to reduce Maine 
residents' income taxes by increasing the amount of the personal exemption.  The State Tax 
Assessor is required to annually determine whether there are sufficient funds in the fund to 
increase the personal exemption by $50 increments and if there are, then make that change 
for the tax year in which that determination of sufficiency is made.  If the change would 
increase the personal exemption beyond the amount allowed under federal law, then the 
joint standing committee having jurisdiction over taxation matters may report out 
legislation that uses the funds to reduce the income tax by other means.
3.  It amends the refundable sales tax fairness credit to increase the maximum credit to 
$300 and increase the income levels at which the credit is phased out, beginning in 2024.