An Act to Support
Maine Legislature, Session 132, LD 0191
Committee Amendment CA_A_H943 (House)
Amends: 36 MRSA §5122, 36 MRSA §5190, 36 MRSA §5217-A, 36 MRSA §5219-C, 36 MRSA §5228, 36 MRSA §5231

COMMITTEE AMENDMENT (tf\ " to H.P. 124, L,D. 191, "An Act to Support
Maine Businesses by Establishing a Pass-through Entity Tax and Tax Credit"
Amend the bill by striking out everything after the enacting clause and inserting the
following:
'PART A
Sec. A-l. 36 MRSA §5122, sub-§l, ^[QQ is enacted to read:
00. For tax years beeinnmg on or after January 1. 2026, an amount equal to the sum
of the taxpayer's distributive share of tax imoosed by chapter 815. subchaoter 3 and the
taxpayer's distributive share of tax knposed by another state of the United States, a
DoUtical subdivision of any such state or the District of Columbia that is substantially
the same as the tax imposed under chapter 815. subchaoter 3.
Sec. A-2. 36 MRSA §5190, first ^[, as amended by PL 2019, c. 3 80, § 1 and affected
by §5, is further amended to read:
A partnership is not subject to the tax imposed by this Part. Persons carrying on
business as partners are liable for the tax imposed by this Part only in their separate or
individual capacities. This section does not apply to the taxes imposed by chapters 819 and
827 Qf^ the tax imposed on partnership audit adjustments pursuant to subchapter 2 or the
tax imposed on oass-throueh entities pursuant to subchaoter 3 .
Sec. A-3. 36 MRSA c. 815,sub-c. 3 is enacted to read:
SUBCHAPTER3
PASS-THROUGH ENTITY TAX
S5199-A. Definitions
COMMITTEE AMENDMENT
nos
COMMITTEE AMENDMENT "A- " to H,P. 124, L.D, 191
As used in this subchaoter. unless the context otherwise indicates, the following terms
have the following meanings,
1. Allowable credits. "Allowable credits" means the total amount of any payments
with regard to a taxpayer that have been or will be paid to the bureau prior to the date the
payment against which the total amount of any pavmentsjs to^eusedas a creditisjiue
and that are available to offset any estimated tax liability under section 5199-H.
2. Distributive share of income. "Distributive share of income" means, with regard
to a qualified member that is a resident mdividual or resident estate or trust, the net of the
portion of income, gain. loss and deduction for the taxable year from the pass-through
entity, includine guaranteed oavments. enterme mto the qualified member's federal
adjusted gross income in the case of a resident individual or federal taxable income in the
case of a resident estate or trust. "Distributive share of income" means, with regard to a
qualified member that is a nonresident individual or nonresident estate or frust. the net of
the portion of income, gain. loss and deduction derived from or connected with sources in
this State, as piovided by section 5142, for the taxable year J&om the pass-through entity.
includme guaranteed oavments. entering into the qualified member's federal adjusted gross
income in the case of a nonresident individual or federal taxable mcome in the case of a
nonresident estate or tmst. If the qualified member is a tmst. residency is determined by
the residency status of the trust and not by the residency status of the beneficiaries ofthe
trust. For purposes of this subchaoter.J:hedistributive share of mcome for a qualified
member is zero if the amount determmed in accordance with this subsection is zero or less.
3. Distributive share of tax. ."Djstnbutive share of tax" means the tax paid by an
electine oass-through entity pursuant to section 5199-C multiplied by a fraction. the
numerator of-which is equal to the qualified member's distributive share ofjncomeandthe
denominator of which is equal to the oass-through entity taxable mcome.
4. Electine pass-throueh entity. "Electing pass-through entity" means a pass-throuRh
entity that has elected for the taxable year to be subject to the tax imposed bv this
subchapter.
5. Estimated tax. "Estimated tax" means the total amount of tax that an electing nass-
0 through entity estimates will be due for a taxable yearunder this subchapter, excluding the
estimated tax liability under section 5199-D. less any allowable credits for that taxable
year,
6, Pass-throughentity. "Pass-through entity" means:
A,Aj3a!'tnershi&as_defmedmthe Code, Section 7701Ca)f2). excluding a publicly
traded partnership as defined in the Code. Section7704fb); and
B. An entity classified as an S corporation under the Code for federal iacome tax
Burposes.
"Pass-through entity" does not include an entity subiectto tax under chapter 819,
7. Pass-throueh entity taxable income, "Pass-through entity taxable income" means
the aggregate total of distributive share of income of all qualified members for the taxable
year increased by the amount of the tax imposed on the tiass-through ^ntitv_bv this
subchapter and by the amount of the tax imposed onjhe pass-through entity by another
state of the United States, a political subdivision of any such state or the District of
Columbia that is substantially the same as the tax imposed under this subchapter.
COMMITTEE AMENDMENT
COMMITTEE AMENDMENT "/A-" to H.P. 124, L.D. 191
"A"1
8. Period of underpayment. "Period of undearpaYment" means the period of tune
from the date an estunated tax installment under section 5199-H is due until the
undemaYment is_satisfied or until the tax return to which the estimated tax instaUment
applies is due. whichever is less.
9. Qualified member, "Qualified member"jneans an mdividual. tmst or estate that
is a direct owner, partner or shareholder in an electine oass-throueh entity, except that
"Qualified member" does not include an organization exempt from tax under the Code.
Section 501, For purposes of this subsection, "direct owner" includes a qualified member
whose^wnershmjn the electmfi pass-throueh entity is held throueh an entity that is
disregarded under the Code for federal mcome tax purposes.
S5199-B. Election of pass-throueh entity tax
Aj3ass-through_entitv that elects to be subiectto_tfie tax imposed by this subchapter
shall declare that election annually on a timely filed return, includine any extension granted
for filing the return. The election is irrevocable after the due date. includine any extension
granted, for filing the return.
S5199-C. Imposition of tax
Notwithstanding any provision of law to the contrary, for every taxable year begumine
on or after January 1. 2026. a tax is imposed on every electine oass-through entity, For
each taxable year, the tax is equal to the pass-throueh entity taxable income multiolied by
the highest marginal tax rate under section 5 111. The tax imBosed by this section may not
be reduced for a pass-throueh entity by any of the credits m chapter 822. Notwithstandine
any provision of law to the contrary, for all budgetary accountme purnoses. receipts from
the tax imposed by this section are indmdual income tax reyenue and must be treated for
such purposes in the same manner as receipts from the tax imposed by chapter 803 .
85199-D. Estimated tax payment of 10% on behalf of nonresident qualified members
For every taxable year beeinnine on or after January 1. 2026. a pass-throueh entity
subject to the tax under this subchapter shall oav. m addition to the tax under section
5199-C. an estimated tax on behalf of its nonresident qualified members in an amount equal
to 10% of the amount of the tax required to be reported to each nonresident qualified
0 member for the taxable year by the electing oass-throueh entity in accordance with section
5199-G. The electitiR pass-through entity, no later than 30 days followine the date the
Maine return of the electing pass-through entity is due in accordance with section 5199-E.
3 without regard to any extension, shall report to each nonresident qualified member the
amount of the estimated tax paid by thepass-throughentity for the taxable year on behalf
5 of the nonresident qualified member, Notwithstandine any Drovision of law to the contrar/.
for all budgetary accounting Durposes, receipts from the tax imposed by this section are
7 individual income tax revenue and must be treated for such purposes in the same manner
as receipts from the tax imposed by chapter 803,
S5199-E. Filine of returns
1, Filine of returns. An electing oass-through entity shall file a return with respect to
the tax imposed by this subchaoter on such forms as may be required by the assessor. The
return must contam such information as required by the assessor, including the name and
social security or federal identification jiumber of each qualified member_ and, for the
taxable year. each qualified member's distributive share of income. distributive share of tax
COMMITTEE AMENDMENT
COMMITTEE AMENDMENT "1\- " to H.P. 124, L,D, 191
,,^,,,
paid by the electing oass-throueh entity pursuant to this subchaoter. the amount of the
estimated tax paid by the entity under section 5199-D^ind the distributive share of tax paid
toanother state of the United States, ajipliticalsubdivisio^o District
of Columbia that is substantially the same as the tax unposed by this subchapter. The
distributive share of the tax paid to another state of the United States, a oolitical subdivision
ofLanv^uch_state^)r theDistrictof Columbia that is substantially the same as the tax
imposed by this subchapter with respect to qualified members that are not residents of the
State may be reported on an aggregated basis. The return required by this subsectiQnmust
be filed, along with any tax due. on or before the 15th day of the 3rd month following the
end of the electing oass-throueh entity's taxable year for federal income tax ourposes. The
return, including related schedules and worksheets, reguired by_ this^subsection mustb
filed with the bureau by electronic data submission,
2. Consent required to amend returns. Notwithstandme the requirement to file an
amended return pursuant to section 5227-A. an electing oass-throueh entity may not amend
a return filed under this subchaoter without the written consent of, or as otherwise
authorized by. the assessor,
§51?9-£^Nonres!dent(iualified^iember filine exception
1. Nonresident individual. A qualified member of an electing pass-through entity
who is a nonresident individual for the entire taxable vear is not reauired to file an income
tax return pursuant to section 5220. subsection 2 for the same taxable year if;
A. The member's entire Maine adjusted eross income. including a spQUse's income in
the case of married individuals filing a joint federal return, is from^ne Qnnore electing
oass-throueh entities;
B, The electing pass-throueh entity or entities file and nay the tax due under this
subchaoter; and
C, The qualified member's credit provided by section 5219-CCC^ plus, the estimated
tax amount paid by the electing; oass-through entity on behalf of the nonresident
qualified member in accordance with section 5199-D is sufficient to satisfy the Maine
individual mcome tax liability of the member and the member's spouse for that taxable
year,
2. Nonresident trust or estate. A qualified member of an electing oass-throueh entity
that is a nonresident trust or estate for the entire taxable Year is_ notrequired to file an
income tax return pursuant to section 5220, subsection 4 for the same taxable year if;
4 A. The member has its entire Maine-sourced income, as determined pursuant to section
5 5142, for the taxableyear from one or more electing pass-through entities;
B, The member would have been required to include income descnbedjn Baragraph
7 A as Maine taxable income if it were to file an income tax return for that year;
C. The member has not distributed_anvofits,Mame-soyrced income, as determined
9 pursuant to section 5142. for the taxable year to its beneficiaries as distributable net
income;
D. The electing pass-throueh entity or entities file and pay the_tax due under this
subchaoter; and
COMMITTEE AMENDMENT
COMMITTEE AMENDMENT"^. "toH.P, 124, L.D. 191
E, The member's credit provided by section 5219-CCC plus the estunated tax amount
EaidbvJheelectmg pass-through entity on behalf of the nonresident aualified member
in accordance with section 5199-D is sufficient to satisfy the Maine income tax liability
for that taxable vear^
S5199-G. Reportine tax to members
For purposes of the credit under section 5219-CCC. the electme pass-through entity,
no later than 3 0 days fQllowing the datetheMainereturnofthe electing pass-through entity
is due in accordance with section 5199-E. shall report to each qualified member that
member s distributive share of tax. Eachmember report must clearly identify the member's
name and federal employer identification number or social security number, the member's
ownership interest in the entity, whetherfhe member w^^^ nonresident of the
State during fhe taxable year. each member's distributive share of income and the
distributive share of tax paid to another state of the United States, a political subdivision of
any such state or the District of Columbia that is substantially the same as the tax imposed
by this subchapter and any other infonnation that may be required by the assessor.
S5199-H. Estimated tax installment payments
Estimated taxes are required with respect to the tax imposed under section 5199-C in
accordance with fhe orovisions of this section.
1. Requirement to pay estimated tax. Every person subject to taxation under this
subchapter shall make payment of estimated tax as required by this section. The
requirement to make estimated tax payments is waived if;
A. The electme pass-throueh entity's estimated tax liability is less than $1.000 for the
taxable year; or
B. The electing pass-through entity had less than $1.000 tax liability under this
subchapter. excludine the estimated tax liability under section 5199-D. for the
preceding taxable year.
2. Amount of estimated tax to be paid. Eveiy electmg pass-throuah entity required
to make payment of estimated tax under this subchaoter is liablefor anestimated tax that
is no less than the smaller of:
A. An amount equal to the electing pass-through entity's tax liability under this
subchapter. excluding the estimated tax liability under section 5199-D. for the
preceding taxable year, if that preceding year was a taxable year of 12 months; and
B. An amount equal to 90% of the electing uass-through entity's tax liability under this
subchaoter. excluding the estimated tax liability under section^ 5199-D,, ^ the current
taxable year.
6 3. Due dates for estimated tax installments. An installment payment is due the 1 5th
7 day of the 4th. 6th. 9th and 13th month followmg the beginning of the electinfi pass-through
8 entity's taxable year.
4. Amount of installment. The amount of estimated tax to be paidjna taxable year
by an electine oass-throueh entity must be paid m mstallments by the dates established in
subsection 3, The amount of the estimated tax must be paid in 4 eauaLmstallments unless
the taxpayer establishes by adequate record the actual distribution of tax liability and
allowable credits, or both, m which case the amount of the installment payments must be
COMMITTEE AMENDMENT
^0^
COMMITTEE AMENDMENT "/L " to H.P. 124, L,D, 191
•A"'
adjusted accordingly and be determined in accordance with the portion of the electing oass-
through entity's estimated tax liability applicable to that oortion of the electing nass-through
entity's taxable year cottroleted by the close ofthe month preceding the installment's due
date less estimated tax payments ah-eadv made for the taxable year.
5. Penalty. A penalty accrues automatically on underpayments of the required
instalbnent amount for the period of underpayment at the rate provided pursuant to section
186. For cause. the assessor may waive or abate all or part of the penalty.
6. Short taxable year. For a taxable year of less than 12 months, the estimated tax
must be paid m full by the 15th day of the last month of thei taxableyeas. For pavment dates
falling within the short taxable year. payment must be made as provided in subsection 3.
7. Installments paid in advance. At the election of the electing pass-throu^h entity,
an installment of estimated tax may be paid prior to the date prescribed for its payment.
§5199-1. Interest on refunds prohibited
Notwithstanding any provision of this Title to the contrary, interest may not be paid by
the assessor on an overpayment of the tax imposed by this subchapter.
Sec. A-4. 36 MRSA §5217-A, as amended by PL 2003,c,391,§9 and c. 673, Pt.
JJ, §4 and affected by §6, is repealed and the following enacted in its place:
§5217-A, Income tax paid to other taxing iurisdiction
A resident individual is allowed a credit against the tax otherwise due under this Part,
excluding the tax imposed by section 5203-C, egual to the^.mount determmed m subsection
1 plus the amount determmed in subsection 2, as limited by subsection 4.
1. Individual income tax. For individual income tax, the credit is 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 or any political
subdivision of a foreiea country that is analogous to astateof the United States with resfiect
to income subject to tax under this Part that is derived from sources in that taxing
inrisdiction,
2. Distributive share. If another state ofthe United States, aDolitical subdivision of
any such state, the District of Columbia or any political subdivision of a foreign country
that is analogous to a state of the United States imposes an income tax pnan individual,
trnst or estate that is substantially similar to the income tax imposed on such an individual.
2 tmst or estate under this Part, the credit is equal to the amount of the individual's distributive
3 share of tax imoosed on a pass-through entity that is substan.tialhLsimilar to the taxunoosed
under chapter 815. subchapter 3. reduced by any refundable credits to the extent the
5 refundable credits reduce the income tax imposed on the individual, tmst pr estate below
zero. with respect to income subject to tax under this Part that is derived from sources in
that taxme jurisdiction.
3. Sourcine of income. In detenninme whether income is derived from sources in
another jurisdiction described in subsections 1 and 2. the assessor may not employ the law
of the other jurisdiction but shall instead assume that a stahite equivalent to section 5142
applies m that jurisdiction.
4. Credit limitation. The credit, for any of the specified taxing jurisdictions described
in subsections 1 and 2. may not exceed the orooortion of the tax otherwise due under this
COMMITTEE AMENDMENT
"A:'1
COMMITTEE AMENDMENT " l\" to H,P, 124, L,D. 191
Part. excludine the tax imposed by section 5203-C. that the amount of the taxpayer's Maine
adjusted gross income derived from sources in that taxing iurisdiction bears to the
taxpayer s entire M^aine adiusted gross mcome^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^xceed the propQrtiQn^f_fhe tax Qtherwise due under this Part,
excluding the tax imnosed by section 5203-C. that the amount of the taxpayer's Mame
adjusted eross income derived from sourcesjtifheQiher state bears to the taxpaver's entire
Maine adjusted eross mcome.
Sec.A-5. 36 MRSA §5219-CCC is enacted to read;
S5219-CCC. Credit for pass-throueh entity tax paid
A qualified member, as defmed in section 5199-A. subsection 9. is allowed a credit
against the tax imposed by this Part equal to 90% of the amount of the tax required to be
reported to the qualified member for the taxable year by an electing pass-throueh entity, as
defmed in section 5199-A. subsection 4. in accordance with section 5199-G. The credit
authorized by this section is refundable. A credit is not allowed under this section unless
the electing pass-throueh entity paid the tax imposed under chapter 815. subchaoter 3 and
provided sufficient mformation on the pass-throyjglL entity tax return as prescribed by the
assessor to identify that qualified member and the qualified member's distributive share of
the tax paid by the electing pass-through entity. The provisions of section 5219-G,
subsection 2 may not be applied to the credit allowed under this section.
Sec. A-6. 36 MRSA §5228, sub-§l, ^B, as amended by PL 2007, c. 438, §105, is
further amended to read;
B. "Estimated tax" means the total amount of tax that a person estimates will be due
for a taxable year under this Part, exclusive of a withholder's liability for taxes withheld
and the tax imposed by chapter 815. subchapter 3. less any allowable credits for that
taxable year.
Sec. A-7. 36 MRSA §5231, sub-§l-A, as amended by PL 2023,c.441, Pt. C, §7
and affected by §11, is further amended to read:
1-A. Federal extension. When an individual, estate or tmst is granted an extension
of time within which to file a federal income tax return for any taxable year, an extension
to file the taxpayer's mcome tax return with respect to the tax imposed by this Part is
automatically granted for an equivalent period from the date prescribed for filing the return.
3 When a taxable corporation, an electing pass-throueh entity under chapter 815. subchaoter
3. or a fmancial mstitution subj ect to the tax imposed by chapter 819 is granted an extension
of time within which to file its federal income tax return for any taxable year, an extension
to file the taxpayer's income tax, pass-through entity tax or franchise tax return with respect
to the tax imposed by this Part is automatically granted for an equivalent period from the
8 date prescribed for filing the return plus 3 0 days.
Sec. A-8. Appropriations and allocations. The following appropriations and
allocations are made,
ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF
Revenue Services, Bureau of 0002
COMMITTEE AMENDMENT
COMMITTEE AMENDMENT"/^" to H.P. 124, L.D. 191
•A"'
Initiative: Provides one-time funding for administrative expenses to update the State's tax
and admiaistmtion system for a new optional account type for pass-through entities.
GENERAL FUND 2025-26 2026-27
AllOther $0 $438,771
GENERAL FUND TOTAL $0 $438,771
Sec. A-9. Application. This Part applies to taxable years beginning on or after
January 1, 2026,
PARTB
Sec. B-l. Fund established. The Pass-through Entity Tax Stabilization Fund,
referred to in this Part as "the fund," is established within the Department of Administrative
and Financial Services as an Other Special Revenue Funds account for the purpose of
stabilizing the revenue impact of the pass-through entity tax established in the Maine
Revised Statutes, Title 36, chapter 815, subchapter 3 on the General Fund.
Sec. B-2. Transfer to Pass-through Entity Tax Stabilization Fund.
Notwithstanding any provision of law to the contrary, on or before June 30, 2027, the State
Controller shall transfer $28,000,000 from the unappropriated surplus of the General Fund
to the fund.
Sec. B-3. Transfer from Pass-through Entity Tax Stabilization Fund.
Notwithstanding any provision of law to the contrary, on or before June 3 0, 2028, the State
Controller shall transfer $28,000,000 from the fund to the unappropriated surplus of the
General Fund.'
Amend the bill by relettering or renumbering any nonconsecutive Part letter or section
number to read consecutively.
SUMMARY
This amendment strikes and replaces the bill. Part A enacts a pass-through entity tax
for tax years beginning on or after January 1, 2026. The tax applies to each taxable year
that the pass-through entity elects to be subject to the tax. The tax is equal to the distributive
share of income of all qualified members multiplied by the highest marginal individual
income tax rate, which is currently 7,15%. Qualified members may claim a refundable
income tax credit equal to 90% of their distributive share of the pass-through entity tax
paid. Part B establishes an Other Special Revenue Funds account for the purpose of
reunbursing the General Fund for net losses in revenue from the pass-through entity tax in
the 2nd and subsequent years of the tax.
5 FISCAL NOTE REQUIRED
(See attached)
COMMITTEE AMENDMENT
Approved;03/18/26
I^RL.
LD 191 LR 274(02)
An Act to Support IVIaine Businesses by Establishing a Pass-through Entity Tax and Tax Credit
Fiscal Note for Bill as Amended by Committee Amendment ^' ^ ^?^/3^
Committee: Taxation
Fiscal Note Required: Yes
Fiscal Note
Projections Projections
FY 2025-26 FY 2026-27 FY 2027-28 FY 2028-29
Net Cost (Savings)
General Fund $0 ($28,086,229) ($6,625,000) ($16,530,000)
Appropriations/AHocations
General Fund
Revenue
General Fund
Other Special Revenue Funds
Transfers
General Fund
Other Special Revenue Funds
Fiscal Detail and Notes
This bill would result in a revenue increase to the General Fund of $56,525,000 in fiscal year 2026-27, a decrease of
$21,375,000 in fiscal year 2027-28 and an increase of $16,530,000 in fiscal year 2028-29 from establishing a pass-
through entity tax. The bill would also result in a revenue increase to the Local Government Fund of $2,975,000 in
fiscal year 2026-27, a decrease of $1,125,000 in fiscal year 2027-28 and an increase of $870,000 in fiscal year 2028-
29, The bill creates a Pass-through Entity Tax Stabilization Fund and transfers $28,000,000 in fiscal year 2026-27
from the General fund to the fund and transfers $28,000,000 in fiscal year 2027-28 from the fund to the General Fund
for the purpose of stabilizing the revenue impact of the pass-through entity tax, The bill includes a one-time General
Fund appropriation to the Department of Administrative and Financial Services, Bureau of Revenue Services of
$438,771 in fiscal year 2026-27 for administrative expenses to update the State's tax and administration system for a
new optional account type for pass-through entities,
LR0274(02) - Fiscal Note - Page 1 of 1
$0
$0
$0
$0
$0
$438,771
$56,525,000
$2,975,000
($28,000,000)
$28,000,000
$0
($21,375,000)
($1,125,000)
$28,000,000
($28,000,000)
$16,530,000
$870,000
$0
$0