Companies need to control costs to improve competitiveness. This helps companies in their desires to drive and sustain continuous innovation. Today’s business world is constantly evolving and companies are always striving to get to the next level. Our cost competitiveness programs will help companies achieve their defined goals.
– Pine Tree Development Zones
– Additional Technology and other Tax Credits
The list above is intended to demonstrate Maine’s most commonly used tax credits and programs. For a complete list of all tax credits available through Maine Revenue Service, please click here.
Pine Tree Development Zones (PTZ)
Tax rebate and reimbursement program offered by the State of Maine. Redevelopment in the PTZ reduces the tax burden for qualified businesses through a variety of exemptions, reimbursements, and credits:
- Corporate Income Tax Exemption– Qualified companies will receive a 100% Maine State corporate income tax exemption for years 1-5 of their Maine based operation. Qualified companies will receive a 50% Maine State corporate income tax exemption for years 6-10 of their Maine based operation.
- Sales Tax Exemption– Qualified companies will receive a 100% State of Maine sales tax exemption on all equipment and building supplies for years 1-10 of their Maine based operation.
- Employment Tax Increment Financing– Qualified companies will be reimbursed 80% of a qualified employees’ personal state income tax obligation. For example, if an employee’s State personal income tax obligation for a year is $2,000, the State will return $1,600 to the company. If a company has ten similar employees, the company will receive $16,000. If a company has 100 similar employees, the company will receive $100,000. The company receives this benefit every year for 10 years.
Employment Tax Increment Financing (ETIF)
The growth of businesses allows lives to grow, too. That’s why we reward Maine businesses that create at least 5 new, high-‐quality jobs with Employment Tax Increment Financing.
An ETIF-approved business may be reimbursed 30, 50 or 75 percent (80% in Pine Tree Zones) of the state income tax withholdings from the net new payroll for up to ten years.
The amount of annual payment is based upon the actual number of qualified employees above the company’s base level of employment. The company may not be reimbursed from ETIF for any period of time when employment, income and/or employee benefits fail to meet the minimum qualification criteria. (Please note that ETIF cannot be taken concurrently with the Jobs & Investment Tax Credit.)
Additional Technology and other Tax Credits:
Certified Media Production Tax Credit
Maine is easy on the eyes, as well as the budgets of media production companies. The state provides media production companies with a credit equal to the state’s income tax, related to the income from the certified media production. The credit may not reduce the entity’s tax liability below zero and unused credit amounts may not be carried over to prior or future years. Businesses claiming the Pine Tree Development Zone income tax credit under 36 M.R.S.A. § 5219-W are not eligible for this credit.
Maine Seed Capital Tax Credit
The Maine Seed Capital Tax Credit is equal to 40% of qualified investment (60% if the investment is in a business located in a certain high-unemployment area). However, taxpayers can only take 25% of the credit in the year of the investment and 25% in each of the following three years. The amount of the credit taken in any one year cannot exceed 50% of the tax otherwise due. The credit cannot be carried back, but can be carried forward up to 15 years.
Sales Tax Exemptions
Maine provides state sales tax exemptions for manufacturing, R&D, custom computer programming, fuel & electricity, biotechnology and clean fuel vehicle sales.
Technology Tax Credits
While Maine’s natural beauty remains the state’s top selling point for tourists, its commitment to technological advances and research prove that Maine is more than just a “Vacationland.”
Maine features several tax credit programs specifically designed to encourage the growth of technology companies in the state including the Research Expense Tax Credit, R&D Super Credit, High-Technology Investment Tax Credit, and Sales Tax exemptions for technology companies.
Research Expense Tax Credit
The Research Expense Tax Credit is based on a percentage of the federal credit for increasing research activities. The credit is limited to 5% of the excess qualified research expenses over the previous three-year average plus 7.5% of the basic research payments in IRC §41(e)(1)(A). The credit is further limited to 100% of the first $25,000 in tax liability plus 75% of the tax liability in excess of $25,000. The credit cannot be carried back, but can be carried forward for up to 15 years. Eligible businesses include any business that engages in research and development activities in Maine that meet the definitions in Section 41 of the Internal Revenue Code. Such expenses include certain in- house and contract research expenses if they relate to discovering information that is technological in nature and intended for use in developing a new or improved business component.
R&D Super Credit
The R&D Super Credit is based on qualified research payments exceeding 150% of the average for the three-year period prior to the effective date of the credit. The credit is limited to 50% of the tax otherwise due after all other credits. Further, the credit cannot reduce tax liability below the amount due the previous year after credits. The credit cannot be carried back, but can be carried forward for up to five years. Eligible businesses include businesses that qualify for the research expense credit and whose qualified research expenses conducted in Maine for the taxable year exceed 150% of the average research expenses for the three taxable years prior to September 1997.