Employment Tax Increment Financing Program (ETIF): For-profit businesses who are a non-retail, non-public utility, that, within two calendar years of becoming ETIF certified: hire 5 or more net-new qualified employees above the company’s employment baseline, established at time of application; offer new, full-time employees access to a group health care plan and ERISA retirement plan; and meet the per capita income for the county of certified location, may be eligible to receive a refund ranging from 30% to 75% of state income tax withholdings paid by the business for the newly hired employees.
Businesses certified under the Pine Tree Development Zone program may receive a withholding tax reimbursement of 80%. The ETIF reimbursement is available for up to 10 years for certified businesses who continue to meet program requirements.
Pine Tree Development Zone Program (PTDZ): Businesses involved in Biotechnology, Aquaculture and Marine Technology, Environmental Technology, Advanced Technologies for Forestry and Agriculture, Manufacturing, Precision Manufacturing, Information Technology and Financial Services, who are certified as a Pine Tree Development Zone business, may qualify for corporate income tax credits, sales and use tax exemptions, a withholding tax reimbursement of 80% and reduced electricity rates. To qualify, a company must operate in one of Maine’s targeted industry sectors and create new jobs paying wages that exceed the per capita personal income of the county in which the project is located. The incentives available under this program are available for up to 10 years for certified businesses who continue to meet program requirements. The original program, which began in 2003, was set to cease accepting new applicants on December 31, 2018. On July 4, 2018, Maine renewed the program and extended the application deadline by three years to December 31, 2021, with the benefits sun setting on December 31, 2031.
Major Business Headquarters Expansion Program (MBHQ): Enacted in 2017, this program is intended to encourage the location and expansion of major business headquarters, in the State of Maine, who intend to make a qualified investment, at the applicant’s headquarters within the State of Maine, of at least $35,000,000, and to promote the recruitment and training of employees for these facilities. The applicant employs at least 5,000 full-time employees worldwide, of which at least 25% are or will be based in Maine. For applicants meeting all program criteria, a refundable credit against the tax due for the taxable year in an amount equal to 2% of the certificated applicant’s qualified investment for a period up to 20 years is available.
Technology Tax Credits: Maine offers tax credits and sales tax exemptions for businesses engaged in certain specialized areas. In general, R & D tax credits are based on federal IRS rules and applied for as part of a company’s state corporate tax return. Sales tax exemptions are applied either at the time of purchase using an Industrial Users Blanket Sales Tax Certificate of Exemption or as a refund with the Refund Form.
Research Expense Tax Credit: The credit is based on a percentage of the federal Credit for Increasing Research Activities. Limitations: 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 under 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.
Food Processing Tax Credit: Passed in June, the food processing tax credit allows eligible Maine companies to receive a refundable tax credit equal to two percent of their investment for 20 years. Companies must make a minimum investment of $35 million and be previously headquartered in Maine for at least five years.
Maine state sales tax exemptions are available for manufacturing, R&D, custom computer programming, fuel & electricity, and biotechnology.
Manufacturing: Sales of machinery and equipment used by the purchaser directly and primarily in the production of tangible personal property for later sale or use is eligible for a sales tax exemption. In addition, items consumed or destroyed directly or primarily in production, and repair and replacement parts for qualified production equipment are exempt from sales tax. Also, any manufacturer is exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing facility.
Manufacturers are also exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing operation.
Research and Development: Sales of machinery and equipment used by the purchaser directly and exclusively in research and development is eligible for a sales tax exemption.
Custom Computer Programming: Any custom computer programming purchased by a business is exempt from sales tax. If a standard program is purchased, then customized, the cost of the standard program would be taxable and the customizing, if separately stated, would be nontaxable.
Biotechnology: Sales of machinery, equipment, instruments and supplies used by the purchaser directly and primarily in a biotechnology application are eligible for a sales tax exemption.
Last updated: July 2019