One of the simplest ways to reduce your tax liability is to take advantage of tax credits and incentive programs. For business owners in Maine, there are plenty of options.
Keep reading for a complete list of business tax incentives, tax credits, and tax exemptions available in Maine.
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Business tax incentives in Maine
Dirigo Business Incentives Program
Under this program, eligible Maine businesses in certain sectors can get tax credits for making significant capital investments or providing employee training. Eligible sectors include:
- Agriculture, forestry, and fishing
- Manufacturing
- Long-distance freight transportation
- Software publishing, data processing, and computer design services
- Engineering, architecture, and scientific research and development services
Businesses in the above sectors can get $2,000 per employee enrolled in a training program and a credit equal to 10% of the money they invest in equipment, machinery, or construction (up to $2 million a year).
Learn more about the credit here, and apply here.
Pine Tree Development Zone Program
The Pine Tree Development Zone Program is a job creation/retention incentive. Businesses in the below sectors can receive several different tax credits if they create new, high-quality jobs or move existing jobs from another state to Maine:
- Biotechnology
- Aquaculture and marine technology
- Composite materials technology
- Environmental technology
- Advanced technologies for forestry and agriculture
- Manufacturing and precision manufacturing
- Information technology
- Financial services
New, high-quality jobs must pay a total income above the county average, must include access to a group healthcare plan, and must provide group retirement benefits.
If your business qualifies, you can get corporate tax credits in varying amounts, sales and use tax exemptions for real and personal property, employee income reimbursements of 3.6%, and reduced electricity rates.
Learn more about the application process or estimate your exact tax credit under the program.
Related: Double-check the minimum wage in your state.
Employment Tax Increment Financing
Maine’s Employment Tax Increment Financing program reimburses new and established businesses for a certain portion of employee income when they meet a hiring minimum. The reimbursement amount ranges from 1.35% to 3.6% of qualified employee income for a period of up to 10 years.
To be eligible for the program, you need to hire five or more new, full-time employees over a two-year period—in quality jobs. That means a job that pays a total income above the county average, offers access to a group healthcare plan, and includes retirement benefits. Retail-only businesses aren’t eligible to apply.
Get all the details on applying for the program.
Research Expense Tax Credit
Maine businesses that qualify for the federal Credit for Increasing Research Activities can also apply for the state’s Research Expense Tax Credit. The credit is equal to 5% of the excess qualified research expenses over the previous three-year average, plus 7.5% of the basic research payments.
The credit is limited to 100% of the first $25,000 in a company’s tax liability plus 75% of the tax liability in excess of $25,000.
For more information on what qualifies as a research activity, brush up on the federal R&D credit rules.
Renewable Chemicals Tax Credit
Companies that produce renewable chemicals can apply for the state’s Renewable Chemicals Tax Credit, which gives them a credit of $0.08 per pound of renewable chemicals.
To qualify, a renewable chemical should be no less than 95% biobased content; must include chemicals, polymers, plastics, and formulated products; and must exclude substances used for food, feed, or fuel, with limited exceptions.
See more information on the tax credit here.
Biofuels Production Tax Credit
Companies that are certified biofuel producers by the Department of Environmental Protection can get a tax credit of $0.05 for every gallon of biofuels they produce. Claim the credit here.
Maine Capital Investment Credit
The Maine Capital Investment Credit is available to businesses that invest in certain depreciable property placed in service in Maine after January 1, 2023. For tax year 2023, the credit is equal to 1.2% of the net increase in the depreciation claimed.
Maine Seed Capital Tax Credit Program
The Maine Seed Capital Tax Credit Program rewards investors for investing in certain eligible Maine businesses, either directly or through venture capital funds. The credit amount is equal to 40% of the investment amount.
To qualify, investors—and the businesses they invest in—must meet the following criteria:
- Businesses must be located in Maine, have annual gross sales of less than $5 million, and have at least one principal owner who operates the business full-time
- Businesses must do one of the following:
- Be a manufacturer
- Provide goods or services with 60% of sales derived from outside the state or to out-of-state residents, but with a majority of company employees in Maine
- Develop or apply advanced technologies
- Be a value-added natural resource enterprise
- Be certified as a visual media production company
- The investor must own less than 50% of the business and may not otherwise control the business
- The investor must now invest more than $500,000 over a consecutive three-year period
Learn how to apply for the credit here.
Education Opportunity Tax Credit/Student Loan Repayment Tax Credit
Maine employers who make student loan payments for their employees are eligible for these tax credits. The Education Opportunity Tax Credit is available for tax years 2008 through 2021. For tax years beginning on or after January 1, 2022, the credit is called the Student Loan Repayment Tax Credit.
Learn more about the credits here.
State Historic Rehabilitation Tax Credit Program
The State Historic Rehabilitation Tax Credit Program incentivizes businesses to rehabilitate or restore designated historic properties in Maine. There are two available credits:
- The Substantial Rehabilitation Credit gives businesses a 25% state credit for any rehabilitation project that also qualifies for the 20% federal credit.
- The Small Project Rehabilitation Credit gives businesses a 25% state credit for qualified rehabilitation expenses between $50,000 and $250,000.
Both these credits can go up by 10% if the rehabilitation project meets certain affordable housing requirements.
Learn more about the credits here.
Major Business Headquarters Expansion Program
The Major Business Headquarters Expansion Program credits large enterprises for relocating to or expanding operations within Maine, as well as hiring and training new employees to staff their business facilities. The credit amount is equal to 2% of the company’s qualified capital investment.
To qualify for the program, a company has to meet the following requirements:
- Locate the principal operating facility in Maine
- Employ at least 5,000 full-time employees worldwide, 25% of which are or will be based in Maine
- Have business locations in at least three other states or foreign countries
- Make a qualified investment in Maine of at least $35 million to design, permit, construct, modify, equip, or expand the applicant’s headquarters
- Hire 80 new full-time employees in Maine for each of the first 10 years the tax credit is claimed
- Employ a total of 800 full-time employees in Maine for each year after the first 10 years after the credit is claimed
Maine Shipbuilding Facility Investment Tax Credit Program
The Maine Shipbuilding Facility Investment Tax Credit Program is designed to create and retain jobs in the shipbuilding industry. Eligible shipbuilding companies can get a credit equal to 3% of their total capital investment in improving their business facilities.
To qualify for the program, a shipbuilding company must meet the below criteria:
- Own and operate or propose to construct and operate a Maine shipbuilding facility
- Make a qualified investment in Maine (expenditures of at least $100 million)
- Employ at least 5,000 qualified employees at the time the application is filed
- Falls outside the criteria for the Pine Tree Development Zone Program and the Maine Employment Tax Increment Financing program at the time the application is filed
Learn how to apply for the program here.
Business tax exemptions in Maine
Business Equipment Tax Exemption Program
The Business Equipment Tax Exemption (BETE) Program gives eligible business owners a 100% property tax exemption on eligible property that was first subject to tax in Maine on or after April 1, 2008. Eligible property includes tangible personal property used primarily for business purposes, attached structures or property, and any repair or replacement parts or accessories for the property.
Learn more about the rules under BETE, then apply here.
Maine Renewable Energy Equipment Tax Exemption
If your business owns solar and wind energy equipment, you don’t have to pay local property tax on your equipment. Apply for the exemption here.
Sales Tax Exemptions for Certain Industries
Maine offers sales tax exemptions on equipment and materials to companies in a variety of industries, including:
- Manufacturing
- Research and development
- Custom computer programming
- Biotechnology
- Commercial agricultural and aquacultural production
Local business tax incentives in Maine
Maine doesn’t just have state-run tax incentive programs—they also have local tax credits and exemptions available to businesses. Check out your city’s website for more information, or search Maine.gov.
Business financing in Maine
Now that you’ve checked out Maine’s business tax incentives, pop over to Gusto’s list of Maine business grants and loans. The state has plenty of local and statewide financing resources for businesses of all sizes—and across all industries.
Want even more resources? Check out these blog posts on running a business in Maine:
