Mainers who subscribe streaming services like Netflix, Hulu, Disney Plus, and Spotify can likely expect to see a new tax applied to their bills in the near future.
As part of the $320 million supplemental budget approved by lawmakers this week, streaming service subscriptions were added to the list of goods and services subject to the state’s 5.5 percent sales tax.
This is the second time that Gov. Janet Mills (D) has attempted to impose a streaming service tax in the state, as lawmakers declined to include her proposal to advance it in the 2024 supplemental budget.
Although cable TV premiums and the sale of digital media are currently taxed under state law, subscription-based streaming services have so far been exempted.
Sharon Huntley — Director of Communications for the Department of Administrative and Financial Services — told the Maine Wire in March of 2024 that the streaming service tax was proposed by the governor to “streamline, simplify, and modernize provisions of the sales tax to better align it with the practice of other states across the country.”
Huntley went on to explain that “this is not a new proposal,” noting that former Gov. Paul LePage (R) “proposed to include digital streaming services under the sales tax in 2017” and Mills “offered a similar proposal in 2020.”
“The proposal would align the taxation of these various forms of consumption of essentially the same content, regardless of the method in which it is consumed, by applying the sales tax to the sale of digital audio-visual and digital audio services,” said Huntley.
Sen. Jim Libby (R-Cumberland) brought attention to the proposed tax at a press conference held in March of 2024.
“Guess who gets hit? My constituents,” Sen. Libby said. “My constituents are all getting hit with a download fee of anything they do that is subscription based.”
“In this digital age, everything is subscription based. Everything is downloaded,” Libby continued. “You got to think about — down the road — how much we’re going to collect here as a state in this new tax.”
Under the biennial budget approved by lawmakers this week, the new 5.5 percent sales tax on streaming services would be accompanied by a change to the service provider tax, which currently sits at 6 percent.
The new budget brings the service provider tax under the regular umbrella of taxable goods and services, meaning that the rate would be lowered by 5.5 percent.
Consequently, both cable television and streaming services will be subject to the same 5.5 percent tax, as explained on page 346 of the budget.
Once this new tax takes effect, Mainers who subscribe to online streaming services can likely expect to see a 5.5 percent increase in their monthly bill.
To illustrate the potential impact of this tax, Mainers who subscribe to Netflix’s standard $17.99 per month plan could see their bill increase by nearly $1 each month.
Less expensive subscriptions, such as Peacock’s basic $7.99 per month plan, could increase by about 40 to 50 cents monthly.
A 2024 study showed that the average American household subscribes to between four and five separate streaming services, meaning that this tax could cost the average household between $1.60 and $5 extra each month.
