Beginning on January 1, Mainers who subscribe to streaming services like Netflix, Hulu, and Spotify may see a new charge on their monthly bill.
Approved as part of Maine’s supplemental budget for the current fiscal year, changes to the state’s tax code will impose a 5.5 percent fee on all streaming service subscriptions starting in the new year.
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.
This comes to an end on New Year’s Day, however, when the new 5.5 percent sales tax takes effect.
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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 at that time.
Under the biennial budget, the new 5.5 percent sales tax on streaming services was 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 to 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.
Consequently, this tax could cost the average household between $1.60 and $5 extra each month, or between $19.20 and $60 on a yearly basis.
Ta-dum!
