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 second in a series (read part one here) examining Maine’s most pressing and impactful decisions.
The tax changes in HR 1 are a major windfall for big businesses. In addition to slashing the federal corporate tax rate, HR 1 will:
- increase how much and how quickly businesses can write off taxes for assets, property, and research and development investments
- enact complex tax accounting changes to further allow big, profitable corporations to avoid taxes
These policies will primarily benefit wealthy corporations, not Maine small businesses, and would cost the state over $200 million each year.1 For context, corporate income tax revenue in FY25 was just $410 million total.2 Maine already gives away hundreds of millions of dollars in tax breaks to businesses each year.
Instead, lawmakers should focus on the real issues impacting Maine small businesses such as worker shortages and the impact of federal tariffs. With this revenue, Maine can make important investments in its people and workforce in areas including child care, housing, health care, and education.
Tax cuts can’t incentivize past behavior
In addition to giving away millions in future tax dollars, these policies are retroactive to include tax year 2025 — and in some cases going back to 2022. These are not incentives — they are tax windfalls for already successful mega-corporations, while offering far smaller benefits to the small businesses that need them most. Maine should not throw away millions of dollars for business decisions that have already been made when those funds could support other important priorities.
Maine can do better
Many Mainers are struggling due to program cuts, lack of available services, and rising property taxes. Big corporations should not be the priority — Maine people should. Rather than conforming to tax giveaways that will primarily benefit wealthy executives and shareholders, lawmakers can choose to invest in the well-being of all Mainers.
Notes:
[1] Including additional tax policies not shown here. See above the linked memo above for additional details.
[2] December 2025 Revenue Forecast. December 1, 2025.