Last month, Governor Janet Mills issued a directive declining to conform the Maine tax code to several provisions in the federal “Working Families tax Cut Act.” These provisions included the elimination of taxes on tips and overtime pay, as well as an increase in the standard deduction—changes that were designed to reduce the overall tax burden for working individuals. I also includes a new $6,000 federal deduction for seniors and a new deduction for car loan interest.
Each year, Maine reviews updates made to the federal Internal Revenue Code to determine whether the state will “conform” with those changes. Conformity helps streamline the tax process for individuals and businesses, reducing confusion and ensuring consistency between state and federal returns. However, full alignment can also carry a significant cost to the state budget, which must balance many competing priorities.
Because Maine has not adopted these provisions, Mainers will not be able to take advantage of the lower taxes, credits and deductions contained in the federal law.
The administration cited fiscal constraints, noting that conforming fully to the federal changes would cost more than $400 million at a time when roughly $67 million was available for tax adjustments. While I question that estimate, years of overspending have left state government well short of the funds need to fully conform.
That is the result of years of overspending while the state collected record high tax revenues.
Since Governor Mills took office, Maine’s overall budget has grown 77%, reflecting both new programs and expanded services. While this growth has funded many initiatives, it has also limited the state’s flexibility in adopting new tax relief measures. That is regrettable, since many of the people I represent could us some tax relief to help pay for the ever increasing cost of living in Maine.
The Legislature will have an opportunity to look at conforming with the “Working Families tax Cut Act” when it reconvenes in January. I believe Maine should conform with federal tax changes that help seniors, workers and Maine families. My focus remains on finding ways to make Maine more affordable for families, small businesses, and retirees—while keeping the state on sound fiscal footing.
If you have any questions or want to share your thoughts, please don’t hesitate to reach out to me at Jim.Thorne@legislature.maine.gov.
It is truly an honor to serve the people of Carmel and Hermon (District 35) and the State of Maine.
Sincerely,
Jim Thorne
State Representative