As the deadline for filing income taxes approaches, tens of thousands of Mainers who don’t owe any income tax should still file a return in order to benefit from refundable state tax credits.
Maine’s income tax forms include two new refundable credits this year. That means that even if you owe no income tax, you could still get a refund of as much as $1,000.
The two credits include the popular Earned Income Tax Credit (EITC) and the new, lesser-known Sales Tax Fairness Credit (STFC). The EITC is based on the federal credit which is worth as much as $6,200. The state credit is worth 5% of the federal credit. While Maine has had a state EITC on the books for years, 2016 is the first year that it is refundable, meaning that even if you owe no state income tax, you may be eligible for refund of as much as $300. Over 100,000 Maine families already claim the refundable federal credit which requires them to file federal income taxes.
The STFC is also new in 2016. The legislature established it to help offset the impact of sales tax increases on low- and middle-income families contained in the 2015 state budget. In 2016, households with up to $40,000 in income can claim a credit up to $180. But even households with up to $51,000 in income may be eligible for some STFC benefit.
In addition to these credits, families now have to file income taxes in order to claim the property tax fairness credit (PTFC). In 2013, the state replaced the old “circuit breaker” property tax program that households claimed through a separate application process with the new PTFC. Both the old circuit breaker and the new PTFC reduce property taxes or rent cost for households that pay a disproportionate share of their income in property taxes or rent. Simply put, they help Mainers stay in their homes. However, to claim this credit which has a maximum value of $600 for individuals under age 65 and $900 for individuals over 65, Maine families must file a state income tax return, online or using the forms Maine Revenue Services provides. The Cash Coalition also provides free assistance to Mainers in filing income taxes.
MECEP is proud to have been part of efforts to get these credits on the books. They make our tax code fairer and target relief where it is needed most. But they only work if households that stand to benefit file their income tax return!