Janet Mills’ Proposed Tax Hikes Are Set to Have a Public Hearing Monday Afternoon

Several of the tax increases and changes included in Gov. Janet Mills’ (D) proposed biennial budget are set to have a public hearing on Monday, February 3.

Among the proposals up for discussion are increased taxes on cigarettes and other tobacco products, changes to the state’s cannabis taxes, and the imposition of a five and a half percent sales tax on streaming service subscriptions.

The public hearing is scheduled to begin at 1pm in State House Room 228. Testimony can also be submitted virtually at www.mainelegislature.org/testimony.

Earlier in the day, starting at around 11am, relevant state departments and agencies will offer their own testimony on these proposals.

Under Part E of Gov. Mills’ proposed budget legislation, the tax rate for cigarettes would be increased from ten cents to fifteen cents per cigarette as of January 5, 2026.

Similarly, the tax imposed on smokeless tobacco products would rise from $2.02 per ounce to $3.03, effective this same date.

The tax rate for all other tobacco products would rise as well under Mills’ proposal, increasing from 43 percent to 65 percent.

Part F of the proposed budget would see the tax imposed on cannabis products from 10 percent to 14 percent, as of January 1, 2026. That tax would only apply to adult-use recreational marijuana products.

Despite this increase, however, Mills’ suggested amendments would also result in a variety of reduced cannabis-related excises taxes.

For example, those with a cultivation facility license would see a smaller excise tax on the cannabis flower sold to other licensees, dropping from $335 per pound to $223 per pound.

Other excise tax reductions would include dropping the tax on sold cannabis trim from $94 per pound to $63 per pound, sold immature cannabis plants or seedlings from $1.50 each to $1 each, sold mature cannabis plants from $35 to $23, and sold cannabis seeds from 30 cents each to 20 cents each.

Under Part G, Mills proposed repealing the service provider tax of six percent, instead taxing them under the general sales tax, consequently reducing the rate from six percent to five and a half percent.

Services impacted by this change would include the provision of cable TV, as well as the transmission and distribution of electricity.

[RELATED: Janet Mills Again Proposes Charging 5.5% Tax on Netflix, Spotify, Disney, and Other Streaming Services]

Much like the supplemental budget proposed by Mills during the previous legislative session, Part G of Mills’ proposed biennial budget would include a tax on streaming services.

Under the language put forward by Mills, “digital audio-visual and digital audio services” — defined as “the electronic transfer of digital audio-visual works and digital audio works to an end user with the right of less than permanent use granted by the seller, including when conditioned upon continued payment from the purchaser or a subscription” — would now be taxable at a rate of 5.5 percent.

Although cable TV premiums and the sale of digital media are currently taxed under state law, subscription-based streaming services have thus far been exempted.

[RELATED: Streaming Service Subscriptions May Soon Be Taxed in Maine]

The proposed tax on streaming services was removed by lawmakers last year before approving the final supplemental budget.

The Appropriations and Financial Affairs (AFA) Committee unanimously agreed to not include the proposed tax in the final version of the supplemental budget. Both the Democrat and Republican Committee reports were reflective of this decision.

[RELATED: Tax on Streaming Service Subscriptions Rejected by Maine Lawmakers]

On Tuesday evening, the governor delivered her 2025 State of the Budget address and was met with opposition from both Maine citizens and Republican lawmakers over the proposed spending and tax increases included in her budget.

In addition to the tax changes up for a public hearing Monday, Mills has also recommended increasing various fees and licensing costs.

Mills’ budget would also see new fees imposed on health care providers, including a 70 cent fee per prescription at pharmacies, a 6 percent fee on the net operating revenue of an ambulance service providers, and an unspecified fee for hospitals based on their number of inpatient beds, up to a total collection of $1.8 million annually.

[RELATED: Here Are All the Taxes and Fees Janet Mills’ Budget Would Create and Increase to Fuel Record State Spending]

Outside of the House chamber where the governor delivered her State of the Budget address Tuesday night, a crowd of Mainers gathered in protest these hikes.

Demonstrators told the Maine Wire that they had expected to be able to silently protest from the chamber’s upper gallery but found out they would not be able to do so when they arrived.

Unlike in prior years, the gallery was closed to the public during Tuesday’s State of the Budget Address.

[RELATED: Protestors Gather in Augusta for Gov. Janet Mills’ 2025 State of the Budget Address]

Unable to demonstrate during the governor’s speech, the protestors lined the hallway leading into the House chamber where both legislative leaders and the governor herself typically enter for the address.

Although many lawmakers did pass by the protest — where they were met with a chorus of boos and other shouts from the crowd — the governor did not.

Instead, Mills bypassed the demonstration, approaching the chamber via a door located directly next to to the House entrance.

Crowd welcomes Gov. Mills at the Maine State of the State! pic.twitter.com/uPfKtxJdr9

— The Maine Wire (@TheMaineWire) January 29, 2025

Republican lawmakers also spoke out Tuesday night against the proposed budget, as well as the message shared by the governor in her speech.

"She blamed everyone but herself for spending for six years."

Maine Republican lawmakers react to Governor Mills' State of the Budget Address. pic.twitter.com/8X5bR5aRNV

— The Maine Wire (@TheMaineWire) January 29, 2025