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An Act To Improve the Property Tax Fairness Credit
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 36 MRSA §943-C, sub-§1, ¶B, as enacted by PL 2017, c. 478, §3, is amended to read:
 
B. The former owner or owners of the property demonstrate to the municipal officers or their designee that:
 
(1) The income, as defined in section 5219-KK, subsection 1, paragraph D including payments received under the federal Social Security Act and railroad retirement benefits to the extent not included in federal adjusted income, of the former owner or owners of the property was less than $40,000, after medical expenses have been deducted, for the calendar year immediately preceding the calendar year in which the right of redemption expired; and
 
(2) The value of liquid assets of the former owner or owners of the property is less than $50,000 in the case of a single individual or $75,000 in the case of 2 or more individuals. For the purposes of this paragraph, "liquid assets" means something of value available to an individual that can be converted to cash in 3 months or less and includes bank accounts, certificates of deposit, money market or mutual funds, life insurance policies, stocks and bonds, lump-sum payments and inheritances and funds from a home equity conversion mortgage that are in the individual's possession whether they are in cash or have been converted to another form.
 
The former owner or owners must provide documentation verifying the former owner's or owners' income and liquid assets.
Sec. 2. 36 MRSA §5219-KK, sub-§1, ¶D, as amended by PL 2017, c. 474, Pt. B, §14, is further amended to read:
 
D. "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; and
 
(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).
Sec. 3. 36 MRSA §5219-KK, sub-§2-A, as enacted by PL 2017, c. 474, Pt. B, §16, is amended to read:
 
2-A. Credit in 2018.   For tax years beginning on or after January 1,in 2018, a resident individual is allowed a credit against the taxes imposed under this Part equal to the amount by which the benefit base for the resident individual exceeds 6% of the resident individual's income. The credit may not exceed $750 for resident individuals under 65 years of age as of the last day of the taxable year or $1,200 for resident individuals 65 years of age and older as of the last day of the taxable year. In the case of married individuals filing a joint return, only one spouse is required to be 65 years of age or older to qualify for the $1,200 credit limitation. Married taxpayers filing separate returns do not qualify for the credit under this section.
Sec. 4.  36 MRSA §5219-KK, sub-§2-B  is enacted to read:
 
2-B.  Credit in 2019 and after.     For tax years beginning on or after January 1, 2019, a resident individual is allowed a credit against the taxes imposed under this Part equal to the amount by which the benefit base for the resident individual exceeds 6% of the resident individual's income. The credit may not exceed $2,000 for a resident individual.
Sec. 5. Application. That section of this Act that amends the Maine Revised Statutes, Title 36, section 5219-KK, subsection 1, paragraph D applies to the determination of the property tax fairness credit for tax years beginning on or after January 1, 2019.
 
SUMMARY
This bill increases the maximum credit available under the property tax fairness credit to $2,000 for resident individuals, regardless of age. Current law provides a maximum credit of $750 for resident individuals under 65 years of age and $1,200 for resident individuals 65 years of age and older. This bill also removes the inclusion of benefits received under the federal Social Security Act and railroad retirement benefits from being included as income for purposes of determining the credit.
The credit is fully refundable after the application of nonrefundable credits.