An Act to Phase Out the Income Tax
Maine Legislature, Session 132, LD 0856
Committee: Taxation
Sponsors: BOYER
Amends: 36 MRSA §5111, 36 MRSA §5200

Legislative Document
No. 856
H.P. 542
House of Representatives, March 4, 2025
An Act to Phase Out the Income Tax
Reference to the Committee on Taxation suggested and ordered printed.
ROBERT B. HUNT
Clerk
Presented by Representative BOYER of Poland.
Cosponsored by Representatives: CHAPMAN of Auburn, DUCHARME of Madison, 
FAULKINGHAM of Winter Harbor, FLYNN of Albion, FREDETTE of Newport, 
WADSWORTH of Hiram, Senators: BERNARD of Aroostook, TIMBERLAKE of 
Androscoggin.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §5111, sub-§1-F, as enacted by PL 2015, c. 267, Pt. DD, §3, is 
amended to read:
1-F.  Single individuals and married persons filing separate returns; tax years 
beginning 2017 from 2017 to 2029.  For tax years beginning on or after January 1, 2017 
but not later than December 31, 2029, for single individuals and married persons filing 
separate returns:
If Maine taxable income is:
The tax is:
Less than $21,050
5.8% of the Maine taxable income
At least $21,050 but less than $50,000
$1,221 plus 6.75% of the excess over 
$21,050
$50,000 or more
$3,175 plus 7.15% of the excess over 
$50,000
Sec. 2.  36 MRSA §5111, sub-§2-F, as enacted by PL 2015, c. 267, Pt. DD, §5, is 
amended to read:
2-F.  Heads of households; tax years beginning 2017 from 2017 to 2029.  For tax 
years beginning on or after January 1, 2017 but not later than December 31, 2029, for 
unmarried individuals or legally separated individuals who qualify as heads of households:
If Maine taxable income is:
The tax is:
Less than $31,550
5.8% of the Maine taxable income
At least $31,550 but less than $75,000
$1,830 plus 6.75% of the excess over 
$31,550
$75,000 or more
$4,763 plus 7.15% of the excess over 
$75,000
Sec. 3.  36 MRSA §5111, sub-§3-F, as enacted by PL 2015, c. 267, Pt. DD, §7, is 
amended to read:
3-F.  Individuals filing married joint returns or surviving spouses; tax years 
beginning 2017 from 2017 to 2029.  For tax years beginning on or after January 1, 2017 
but not later than December 31, 2029, for individuals filing married joint returns or 
surviving spouses permitted to file a joint return:
If Maine taxable income is:
The tax is:
Less than $42,100
5.8% of the Maine taxable income
At least $42,100 but less than $100,000
$2,442 plus 6.75% of the excess over 
$42,100
$100,000 or more
$6,350 plus 7.15% of the excess over 
$100,000
Sec. 4.  36 MRSA §5111, sub-§7 is enacted to read:
7.  Phase-out.  For tax years beginning on or after January 1, 2026, for each taxpayer 
filing an income tax return under this chapter, the amount of tax calculated under subsection 
1-F, 2-F or 3-F, as adjusted under section 5403, is reduced as follows.
A.  For a tax year beginning in 2026, the amount of tax calculated is multiplied by 80%.
B.  For a tax year beginning in 2027, the amount of tax calculated is multiplied by 60%.
C.  For a tax year beginning in 2028, the amount of tax calculated is multiplied by 40%.
D.  For a tax year beginning in 2029, the amount of tax calculated is multiplied by 20%.
Sec. 5.  36 MRSA §5111, sub-§8 is enacted to read:
8.  Income tax eliminated.  Beginning January 1, 2030, no taxes are imposed under 
this section.
Sec. 6.  36 MRSA §5200, sub-§1-A, as enacted by PL 2017, c. 474, Pt. E, §2, is 
amended to read:
1-A.  Imposition and rate of tax beginning 2018 from 2017 to 2029.  For tax years 
beginning on or after January 1, 2018 but not later than December 31, 2029, a tax is 
imposed for each taxable year at the following rates on each taxable corporation and on 
each group of corporations that derives income from a unitary business carried on by 2 or 
more members of an affiliated group:
If the income is:
The tax is: 
Not over $350,000
3.5% of the income
$350,000 but not over $1,050,000
$12,250 plus 7.93% of the excess over 
$350,000
$1,050,000 but not over $3,500,000
$67,760 plus 8.33% of the excess over 
$1,050,000
$3,500,000 or more
$271,845 plus 8.93% of the excess 
over $3,500,000
In the case of an affiliated group of corporations engaged in a unitary business with activity 
taxable only by Maine, the rates provided in this subsection are applied only to the first 
$3,500,000 of the Maine net income of the entire group and must be apportioned equally 
among the taxable corporations unless those taxable corporations jointly elect a different 
apportionment. The balance of the Maine net income of the entire group is taxed at 8.93%.
In the case of an affiliated group of corporations engaged in a unitary business with activity 
taxable both within and without this State, the rates provided in this subsection are applied 
only to the first $3,500,000 of the net income of the entire group and must be apportioned 
equally among the taxable corporations unless those taxable corporations jointly elect a 
different apportionment. The balance of the net income of the entire group is taxed at 
8.93%.
Sec. 7.  36 MRSA §5200, sub-§7 is enacted to read:
7.  Phase-out.  For tax years beginning on or after January 1, 2026 and ending before 
January 1, 2030, for each taxpayer filing an income tax return under this chapter, the 
amount of tax calculated under subsection 1-A is reduced as follows.
A.  For a tax year beginning in 2026, the amount of tax calculated is multiplied by 80%.
B.  For a tax year beginning in 2027, the amount of tax calculated is multiplied by 60%.
C.  For a tax year beginning in 2028, the amount of tax calculated is multiplied by 40%.
D.  For a tax year beginning in 2029, the amount of tax calculated is multiplied by 20%.
Sec. 8.  36 MRSA §5200, sub-§8 is enacted to read:
8.  Income tax eliminated.  Beginning January 1, 2030, no taxes are imposed under 
this section.
Sec. 9.  Spending reductions.  Beginning with fiscal year 2026-27, the Department 
of Administrative and Financial Services, Bureau of the Budget shall reduce the budget 
each fiscal year for each department of State Government proportionally to achieve an 
overall reduction in expenditures equal to the reduction of revenue under the Maine 
Revised Statutes, Title 36, section 5111, subsections 7 and 8 and section 5200, subsections 
and 8.
Sec. 10.  Corrective legislation.  By January 1, 2029, the Department of 
Administrative and Financial Services, Bureau of Revenue Services shall submit legislation 
to the joint standing committee of the Legislature having jurisdiction over taxation matters 
that corrects any conflicts in the Maine Revised Statutes resulting from the repeal of the 
individual and corporate income tax as proposed in Title 36, section 5111, subsections 7 
and 8 and section 5200, subsections 7 and 8.  The joint standing committee may report out 
a bill to the 134th Legislature in 2029 making the necessary changes.
SUMMARY
This bill phases out the income tax over 5 years beginning in 2026 and requires that 
state department budgets be reduced proportionally.