Maine lawmakers are considering establishing a refundable electricity cost fairness tax credit valued at up to $600 targeted at lower-income Mainers.
Refundable tax credits are able to be claimed regardless of whether or not taxes are owed, as opposed to nonrefundable credits which can only be used to reduce the total amount of taxes owed.
According to an Axios report from this past summer, Mainers saw the highest year-over-year increase in electricity costs nationwide between 2024 and 2025.
In just one year, from May 2024 to May 2025, Maine’s average residential energy costs increased by a staggering 36.3 percent.
Nationwide, there was an increase of just 6.5 percent during this same period.
[RELATED: Maine Has Highest 2024-2025 Energy Cost Increase With Staggering 36% Hike]
Under the proposed tax credit, individuals would be eligible to receive a base credit of $335 each year, while those filing jointly or as a head of household qualify for a base credit of $550.
Joint filers or heads of household that can claim one dependent would receive an extra $25, while those claiming two or more dependents would get an additional $50.
These baseline amounts would then be phased out based on residents’ income. For single taxpayers, the amount would be reduced by $27 for every $500 they earn over $20,000.
Heads of household would see the amount of their credits lowered by $40 for every $750 they make over $30,000.
For joint filers, the credit would be reduced by $53 for every $1,000 earned over $40,000.
Beginning in 2027, the baseline tax credits and income thresholds would be indexed to inflation.
Click Here to Read the Full Text of LD 2078
“This money would be put back directly into the pockets of those who need it most,” said bill sponsor Rep. Kilton M. Webb (D-Durham), according to WGME.
“The credit would work similar to the state’s existing property tax fairness credit,” Rep. Webb said. “Both of these are proven policies that have helped lessen the financial burden for many Mainers.”
Co-sponsor of the bill Rep. Sally Jeane Cluchey (D-Bowdoinham) offered supportive testimony earlier this week before the Taxation Committee, highlighting Mainers’ struggle to afford the state’s high electricity costs.
“While the Legislature cannot control the market forces driving energy costs, we can provide meaningful relief to those bearing the heaviest burden,” said Rep. Cluchey.
Like Webb, Cluchey also mentioned Maine’s existing Property Tax Fairness Credit and Sales Tax Fairness Credit, both of which are also geared toward lower-income Mainers.
A representative of Maine’s Department of Administrative and Financial Services (DAFS) testified in opposition to the proposed measure, arguing that the bill “does not solve the underlying issue of high energy costs, and instead further complicates the Maine income tax by creating another costly and complex refundable tax credit.”
“Directly addressing electricity costs would be simpler, quicker, and more effective than involving a new agency and requiring taxpayers to wait until tax filing season to claim a new credit on their tax returns,” the DAFS representative said.
It was also noted in this testimony that the preliminary fiscal impact estimate for the bill suggests that the state could lose $45 million in revenue as a result of implementing the new credit.
The Taxation Committee has not yet scheduled a worksession for LD 2078, although it can be expected that one will be held in the near future.
