Here’s How Republican Lawmakers Plan to Phase Out Maine’s Income Tax by 2030

Nine Republican lawmakers are looking to completely phase out Maine’s income tax by 2030 and reduce the state budget proportionally, according to a bill they introduced this week.

Based on their plan, beginning in 2026, state income taxes would gradually be phased out over the course of several years, with Mainers paying a smaller and smaller percentage of the state income tax until it is eliminated entirely in 2030.

If approved, this legislation would result in the elimination of state income tax both for individuals and corporations.

In conjunction with this, the Bureau of the Budget would be directed to reduce the state’s budget proportionally, so that overall expenditures and revenue are reduced in corresponding measure.

On the proposed timeline, by January 2029, the Bureau of Revenue Services would need to present legislation to the appropriate committee that corrects any conflicts that could potentially arise from the repeal of Maine’s income tax.

The “Act to Phase Out the Income Tax,” LD 856, was sponsored by Rep. David Boyer (R-Poland) and cosponsored by Rep. Quentin J. Chapman (R-Auburn), Rep. Jack Ducharme (R-Madison), House Minority Leader Billy Bob Faulkingham (R-Winter Harbor), Rep. Paul R. Flynn (R-Albion), Rep. Kenneth Wade Fredette (R-Newport), Rep. Nathan Wadsworth (R-Hiram), Sen. Susan Bernard (R-Aroostook), and Sen. Jeff Timberlake (R-Androscoggin).

Click Here for More Information on LD 856

LD 671, a similar Republican-led bill introduced this year by Rep. Laurel Libby (R-Auburn) would eliminate Maine’s income tax immediately, beginning on January 1, 2026.

This legislation would also require the state to develop zero-based budgets for the next two bienniums.

After that, all departments and agencies in the Executive, Legislative and Judicial Departments of State Government would be required to create a zero-based budget at least once every eight years.

Under “zero-based budgeting,” all corners of the state government would regularly be required to reconsider all aspects of their spending and rebuild their budgets from the ground up.

During off-years, departments and agencies would need to undertake “targeted budgeting or a similar alternative” that include, at a minimum, recommendations for five percent and 10 percent spending reductions.

[RELATED: Should Maine Be Charging Residents Income Tax? These Lawmakers Don’t Think So]

Democrat lawmakers have also sought to amend Maine’s income tax structure, but the plan advanced by these lawmakers works in a very different direction.

If approved, their plan would result in Maine’s top earners being subjected to tax rates up to 1.05 percent higher than under the current system, bringing Maine’s maximum tax rate to 8.2 percent.

To accomplish this, three new tax brackets would be added to encompass individuals earning over $144,500, heads of household earning more than $216,750, and married couples making over $289,000.

The proposed law would also nearly double the upper threshold for the state’s lowest income tax bracket, allowing a broader swath of Mainers to qualify for it.

[RELATED: Tax the Rich — Democrat Lawmakers Look to Restructure Maine’s Income Tax Brackets, Raise Taxes on Top Earners]

Public hearings have already been held for both of these proposals, and committee members will now continue to consider these bills before issuing their recommendations to the full legislature.

A public hearing for LD 856 has been scheduled for Thursday, March 13 at 10am in State House Room 127 before the Taxation Committee. Testimony may also be submitted online at www.mainelegislature.org/testimony.