Business associations are seeking legislation (LD 191) that would have Maine join 36 other states and create a pass-through entity tax (PTET).  The tax would be optional and would enable partners and shareholders of S corporations to choose to pay tax on business income at the entity level.

“The effect of this is to allow a member of a pass-through entity a credit of 90% of the member’s share of Maine income taxes paid as a pass-through entity,” according to a summary statement for LD 191.

Maine Revenue Services issued a report last month on the issue, noting the tax is intended to be a workaround to the federal personal income tax cap of $10,000 on deduction of state and local taxes (SALT).  MRS pointed the administrative complexity of setting up a PTET option in Maine and recommended waiting to see what action is taken at the federal level on the SALT cap and other significant federal tax provisions that are set to expire at the end of 2025.  However, if the legislature enacts LD 191 this year, MRS recommends the PTET option apply to tax years beginning on or after January 1, 2026.

www.maine.gov/revenue/taxes/tax-policy-office

A public hearing on LD 191 has not been scheduled yet.

State House Items

Flexible Scheduling Headache for Employers (LD 60) – Advocates are renewing their push for a law that would allow employees to request flexible work schedules or arrangements from their employers.  Employers may deny an employee’s request if granting it would be “inconsistent with the employer’s operations.”  The kicker is that LD 60 would require employers of all sizes to provide a written explanation for denying an employee’s request.  Denial may include but is not limited to a reason among nine listed in the legislation.  Testimony from a proponent group stated that “large numbers of workers are working schedules which are primarily set by their employer with little or no input from the employee.”  A work session is set for March 4 at 2 p.m.

Notable Legislation

• Require Pay Range Disclosure, Pay History Records (LD 54)
• Allow Employees to Request Flexible Work Schedules (LD 60)
• Establish a Pass-through Entity Tax & Tax Credit (LD 191)
• Increase Education Funding Through Additional 3% Tax on Lodging (LD 225)
• Adjust Individual Income Brackets, Add New Top Tax Rates (LD 229)
• Provide Legislative Oversight to Rulemaking Petition Process (LD 236)
• Advance the Maine Retirement Savings Program (LD 355)
• Repeal the Paid Family & Medical Leave Program (LD 406, LD 539)
• Provide 5-year Automatic Repeal of Agency Rules (LD 490)
• Prohibit Municipality from Prohibiting Particular Energy System or Distributor (LD 556)

For more information: https://legislature.maine.gov/

PFML FAQ Update – State officials in charge of the Paid Family & Medical Leave law periodically update answers to a list of frequently asked questions (FAQs).  The latest document contains answers to 49 questions.  www.maine.gov/paidleave/