Many of Maine’s tax rules are tied to federal law, so when federal tax laws change, the state must decide whether to follow or set its own rules. Following the passage of HR 1 — the federal Republican megabill also known as the One Big Beautiful Bill Act — states now face key decisions about whether to conform or decouple from these new tax provisions.
This blog is the first in a series (read part two here) examining Maine’s most pressing and impactful decisions.
At a glance
- Policy gimmicks in HR 1 disguise its true nature as a huge tax giveaway to the ultra-wealthy and big corporations — Maine should not compromise the future well-being of its residents to give tax breaks to the rich
- Conformity could significantly impact Maine’s ability to fairly raise revenue in the future and cost more than $300 million per year — not including millions in additional tax breaks extending years into the past.
- The few tax changes in HR 1 benefitting households with low- and middle-income are narrow and leave most Mainers behind — miniscule tax cuts won’t benefit struggling Mainers if the systems around them are crumbling
HR 1 is a huge tax giveaway to the wealthy offering little benefit for everyday Mainers
The tax changes in HR 1 benefitting individual taxpayers are minimal compared to the huge tax giveaways it contains for the ultra-wealthy:
- The 1.2 million US households (about 0.6% of the population) with incomes over $1 million will receive more in total tax cuts than the 127 million households with incomes below $100,000.1
- Higher earning Mainers will enjoy much greater tax benefits than everyday working Mainers, who will benefit little once the impact of tariffs and the cuts to the social safety net are factored in.2
Policy gimmicks are a smokescreen for how little HR 1 helps everyday Mainers
Policy gimmicks that sound good on the surface, like cutting taxes on tips, overtime, and older Mainers, are actually regressive — they help those who already have more and leave behind those who have less. Mainers know better than to fall for this — the Trump administration can’t distract from how bad a deal this is for working Mainers by throwing them table scraps while the ultra-wealthy have an all-you-can-eat buffet. MECEP opposes these policies, with the exception of increasing the standard deduction, which would offer a small benefit to most Mainers.
Income tax changes in HR 1 are inequitable
The provisions in HR 1 that seek to bolster support for those with low and middle income are poorly targeted and will help a very small percentage of the population, leaving many workers behind.
Fair tax policy should treat all income equally. The income of bartenders and other workers in service industries should not be taxed differently than the income of child care and direct care workers who care for children and older people.
Instead, lawmakers should support policies that help a broader range of workers. For example, many people work long hours in demanding jobs without qualifying for overtime pay, and expanding the salary threshold for overtime eligibility, as proposed by LD 599, would more effectively support low-wage workers. And instead of making tipped income tax free, which would benefit only about 2% of workers, lawmakers could strengthen labor protections for all workers in the gig economy by ensuring they have a minimum wage, access to paid sick time and workers’ compensation, and transparency about how they are paid.
Conformity with individual income tax changes is expensive
Conforming with most of the individual, retroactive tax changes in HR 1 is estimated by Maine Revenue Services to cost the state over $100 million per year. The state should instead prioritize important services and supports Mainers need.
Maine can chart its own path
Instead of falling for these gimmicks, the Legislature should bolster supports that help all Mainers access the services they need to enter and remain in the workforce, and strengthen labor laws protecting them. To support older Mainers, the legislature should invest in area agencies on aging and the direct care workforce.
Conformity FAQ
What is conformity?
Many tax provisions in Maine are tied to federal laws and definitions. When the federal tax code changes, Maine must decide whether to conform (align) with federal changes or decouple (differ).
What is Maine’s conformity process?
HR 1 makes permanent many of the provisions from the previous Tax Cuts and Jobs Act (TCJA) of 2017, which the state has already addressed in past conformity bills. The state decoupled from many of these provisions, such as the standard deduction. Maine also does not automatically conform to federal changes, meaning the Legislature will have to proactively opt-in to any changes through a conformity bill.
When does HR 1 go into effect?
Some HR 1 provisions are retroactive to include tax year 2025, or in some cases even earlier tax years, and will impact taxpayer filings beginning in January 2026.
How will conformity impact tax filings?
Governor Mills has instructed Maine Revenue Services (MRS) to proactively include certain provisions on Maine’s forms for tax year 2025, most of which are business tax changes.3 Any additional changes made by the Legislature after this date will necessitate taxpayers to refile or file an extension to take any tax benefits.
Notes:
[1] Jacoby, Samantha, Chuck Marr, and Kris Cox. “Republican Megabill Tax Provisions Are Skewed to the Rich, Fail to Deliver for Families, and Are Fiscally Irresponsible.” Center on Budget and Policy Priorities, December 17, 2025.
[2] Myall, James. “How Trump’s ‘Big Beautiful Bill’ further enriches the rich and immiserates the poor.” Maine Center for Economic Policy. July 8, 2025.
[3] Determination and Direction of the Governor of the State Of Maine. October 1, 2025.