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Tax Incentives And Credits In Maine

Monika Miles, Maine, Multistate taxes

This month we travel all the way to the northeast corner of the country to the state with the rocky coastline and maritime history of Maine, the Pine Tree State.

Maine is the northeasternmost state in the contiguous United States. It is known for its jagged rocky coastline, low, rolling mountains, heavily forested interior, picturesque waterways, and its seafood cuisine, especially clams and lobster.

During the last ice age, the receding glacier left artifacts that we find interesting today- millennia later. Much of Maine’s geomorphology was created by extended glacial activity at the end of the last ice age. Prominent glacial features include Somes sound and Bubble Rock, both part of Acadia National Park on Mount Desert Island. Carved by glaciers, Somes sound is considered to be the only fjord on the eastern seaboard and reaches depths of 175 feet. The extreme depth and deep drop-off allow large ships to navigate almost the entire length of the sound. These features also have made it attractive for boat builders, such as the prestigious Hinkley Yachts.

Remnants from the receding glacier have given scientists insight in the geological history of the area. Bubble Rock, a glacial erratic, is a large boulder perched on the edge of Bubble Mountain in Acadia National Park. A glacial erratic is a piece of rock that differs from the size and type of rock native to the area in which it rests. By analyzing the type of granite, geologists discovered that glaciers carried Bubble Rock to its present location near the town of Lucerne, about 300 miles away. The Iapetus Sutre runs through the north and west parts of the state, being underlain by the ancient Laurentian terrane, and the south and east parts of the state underlain by the Avalonian terrane. The Iapetus Sutre is a major geological fault caused by the collision of several land masses.

Business Climate

Maine’s agricultural outputs include poultry, eggs, dairy products, cattle, wild blueberries, apples, maple syrup, and maple sugar. Commercial fishing, once a mainstay of the state’s economy, maintains a presence, particularly lobstering and groundfishing. Western Maine aquifers and springs are a major source of bottled water. Maine is the number one producer of low-bush blueberries in the nation.

Maine’s industrial outputs consist chiefly of its historically important paper, lumber and wood products, leather products, food products, and textiles. Naval shipbuilding and construction remain important as well, with Bath Iron Works in Bath and Portsmouth Naval Shipyard in Kittery. However, newer technologies, such as electronic equipment and bio-technology are transforming the industrial base of the state.

Tourism and outdoor recreation play a major and increasingly important role in Maine’s economy. The state is a popular destination for sport hunting (particularly deer, moose, and bear), sport fishing, snowmobiling, skiing, boating, camping and hiking, among others.

Historically, Maine played a key role in national transportation. Beginning around 1880, Portland’s rail link and ice free port made it Canada’s principal water port, until the aggressive development of Halifax, Nova Scotia in the mid 1900s. By 2013, only 12 million short tons passed into and out of Portland by sea, which places it 45th of U.S. water ports.

Maine has a longstanding tradition of being home to many family owned shipbuilding companies. In the 18th and 19th centuries, these shipyards produced wooden sailing ships for transoceanic transport of passengers and cargo. Prominent and successful shipbuilding families in this early era were the Pennells, Skolfields and Morses who collectively made up a sizeable portion of the economy.

Tax Climate

With this interesting geological and business background, let’s take a look at today’s climate for businesses.

Maine’s top individual income tax rate in the state is 10.15% with various tax brackets making up the personal income tax structure. The top corporate income tax rate is 8.93%.

The state sales tax rate is 5.5%, which ranks 29th in the nation. Additionally, the local sales tax rate is 1.89% to make a combined sales tax rate of 6.39%. This combined rate ranks 31st in the nation. As a comparison, California’s state sales tax rate is 7.25%, plus municipal taxes often at 1-2%.

Other taxes that are of interest to consumers are the gasoline tax and cigarette tax. Maine’s gasoline tax is 30.01 cents per gallon and ranks 23rd in the nation. The state cigarette tax rate per 20-pack is $2.00, which ranks 12th in the nation.

Maine is moderate in its approach to taxation of technology products for sales tax purposes. Digital books, audio works and audio visual works in Maine are subject to sales taxation. However, digital magazines and newspapers are exempt from sales tax. Prewritten software is taxable while custom software is exempt from tax. Software-as-a-Service is also exempt from taxation. How products are produced, sold and delivered is critical to determining its tax status.

Tax Incentives and Credits

Businesses in Maine, and those considering moving to Maine, may be able to take advantage of several tax credits. Some of these include:

Community Development Block Grant Program– The Community Development Block Grant Program (CDBG) and loans provide funding and technical support for community projects that meet economic development objectives and lead to job creation or retention for Maine residents with low to moderate income. More information on this program can be found here.

Equity Capital Programs– The State of Maine provides equity capital programs for businesses seeking direct capital investment. Click here to view a list of programs available to Maine’s business owners concerning equity capital.

Technology Tax Credits– These credits allow companies involved in manufacturing and certain research-driven activities to take advantage of significant credits and tax exemptions for everything from electricity cost to specialized equipment purchases and other expenses involved in R&D. For more information on other technology tax credits, click here.

Maine has an interesting complex of business and tax opportunities that may interest you. Our team at Miles Consulting Group is always available to discuss the specifics of your situation, whether in Maine or other states, we can help you navigate the complex tax structures arising from your multistate operations. Call us to help you achieve the best tax efficiencies.

If you have questions about multistate taxes, be sure to contact Monika Miles.

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.