An Act to Establish the Gas Tax Fairness Credit

Be it enacted by the People of the State of Maine as follows:

Sec. 1.  36 MRSA §5213-B is enacted to read:

• 5213-B. Gas tax fairness credit

For tax years beginning on or after January 1, 2023, individuals are allowed a credit as computed under this section against the taxes imposed under this Part.

1. 1. As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
2. A. “Base credit” means:

(1)  For single individuals, $125; and

(2)  For individuals filing joint returns or as heads of households, $175 plus an additional amount equal to:

(a)  For individuals filing joint returns, $25 if they can claim the federal child tax credit pursuant to the Code, Section 24 for no more than one qualifying child or dependent or $50 if they can claim the credit for more than one qualifying child or dependent; or

(b)  For individuals filing as heads of households, $25 if they can claim the federal child tax credit pursuant to the Code, Section 24 for 2 qualifying children or dependents or $50 if they can claim the credit for more than 2 qualifying children or dependents.

1. B. “Income” means federal adjusted gross income increased by the following amounts:

(1)  Trade or business losses; capital losses; any net loss resulting from combining the income or loss from rental real estate and royalties, the income or loss from partnerships and S corporations, the income or loss from estates and trusts, the income or loss from real estate mortgage investment conduits and the net farm rental income or loss; any loss associated with the sale of business property; and farm losses included in federal adjusted gross income;

(2)  Interest received to the extent not included in federal adjusted gross income;

(3)  Payments received under the federal Social Security Act and railroad retirement benefits to the extent not included in federal adjusted gross income; and

(4)  The following amounts deducted in arriving at federal adjusted gross income:

(a)  Educator expenses pursuant to the Code, Section 62(a)(2)(D);

(b)  Certain business expenses of performing artists pursuant to the Code, Section 62(a)(2)(B);

(c)  Certain business expenses of government officials pursuant to the Code, Section 62(a)(2)(C);

(d)  Certain business expenses of reservists pursuant to the Code, Section 62(a)(2)(E);

(e)  Health savings account deductions pursuant to the Code, Section 62(a)(16) and Section 62(a)(19);

(f)  Moving expenses pursuant to the Code, Section 62(a)(15);

(g)  The deductible part of self-employment tax pursuant to the Code, Section 164(f);

(h)  The deduction for self-employed SEP, SIMPLE and qualified plans pursuant to the Code, Section 62(a)(6);

(i)  The self-employed health insurance deduction pursuant to the Code, Section 162(l);

(j)  The penalty for early withdrawal of savings pursuant to the Code, Section 62(a)(9);

(k)  Alimony paid pursuant to the Code, Section 62(a)(10);

(l)  The IRA deduction pursuant to the Code, Section 62(a)(7);

(m)  The student loan interest deduction pursuant to the Code, Section 62(a)(17); and

(n)  The tuition and fees deduction pursuant to the Code, Section 62(a)(18).

42. C. “Motor vehicle” has the same meaning as in Title 29-A, section 101, subsection 42.
43. 2. Credit for resident taxpayer. A resident individual who is the owner of a motor vehicle that was registered in the State for at least 6 months of the tax year for which the credit is being claimed is allowed a credit equal to the applicable base credit amount, subject to the phase-out provisions under subsection 4.
44. 3. Credit for part-year resident taxpayer. A taxpayer who is the owner of a motor vehicle that was registered in the State for at least 6 months of the tax year for which the credit is being claimed and who files a return as a part-year resident in accordance with section 5224‑A is allowed a credit equal to the applicable base credit amount, subject to the phase-out provisions under subsection 4, multiplied by a ratio, the numerator of which is the individual’s income as modified by section 5122 for that portion of the taxable year during which the individual was a resident plus the individual’s income from sources within this State, as determined under section 5142, for that portion of the taxable year during which the individual was a nonresident and the denominator of which is the individual’s entire income, as modified by section 5122.
45. 4. Phase-out of credit. The credit allowed under this section is phased out as follows.
46. A. For single individuals, the credit is reduced by $10 for every $500 or portion thereof that exceeds $20,000 of the income.
47. B. For unmarried individuals or legally separated individuals who qualify as heads of households, the credit is reduced by $15 for every $750 or portion thereof that exceeds $30,000 of the income.
48. C. For individuals filing married joint returns or surviving spouses permitted to file joint returns, the credit is reduced by $20 for every $1,000 or portion thereof that exceeds $40,000 of the income.
49. 5. Refundability of credit. The tax credit allowed under this section is refundable.
50. 6. The following individuals do not qualify for the credit under this section:
51. A. Married taxpayers filing separate returns;
52. B. Individuals who do not qualify as resident individuals because they do not meet the requirements of section 5102, subsection 5, paragraph A; or
53. C. Individuals who may be claimed as a dependent on another taxpayer’s return.

SUMMARY

This bill enacts a new gas tax fairness credit, based on the current sales tax fairness credit.  In order to be eligible, a taxpayer must have had a motor vehicle registered in Maine for at least 6 months of the tax year for which the credit is being claimed.  The credit is $125 for single individuals and at least $175 for individuals filing jointly or as heads of households and is phased out based on income level.