An Act To Encourage Resident-Owned Communities And Cooperatives And Preserve Affordable Housing Through Tax Credits

132nd Legislature (2025-2026) Introduced by Donna Bailey and 6 co-sponsors

The law excludes up to $750,000 of gain from state income tax when transferring a housing business to a resident-owned cooperative or municipal housing authority to preserve afford

Signed by Governor

#employeeandcoopbusinesses #exemptions #incometax

Summary — LD 554 (132nd Maine Legislature)

Title: An Act To Encourage Resident‑Owned Communities And Cooperatives And Preserve Affordable Housing Through Tax Credits
Status: Enacted (Signed by Governor 2025‑07‑01)
Introduced: 2025‑02‑11
Committee: Taxation (reported Out‑to‑Pass as OTP‑AM; Committee Amendment A (S‑163) adopted)

Purpose / Intent

LD 554 is intended to encourage conversions of privately owned housing businesses into resident‑owned cooperatives or municipal ownership and thereby help preserve affordable housing. It achieves this by providing a state income tax exclusion for certain gains realized when a business is transferred to a qualifying housing entity.

Key provisions

Excludes from Maine state income tax the amount of gain recognized by a taxpayer when transferring a business to either:

a cooperative affordable housing corporation (i.e., a resident‑owned cooperative), or
a municipal housing authority.

The exclusion is capped at $750,000 of gain per taxpayer for such transfers.

The bill as enacted incorporates Committee Amendment A (S‑163).

(Note: fiscal documents describe the change as an exclusion/deduction from state income tax rather than a refundable tax credit.)

Who is affected

Property/business owners who transfer their business (for example, owners of manufactured‑housing communities or other housing businesses) to a cooperative affordable housing corporation or to a municipal housing authority.

The Bureau of Revenue Services (administration/implementation workload).

State finances: General Fund and certain Other Special Revenue Funds.

Fiscal impact

Ongoing estimated revenue decrease to the General Fund of $76,000 annually (FY 2025‑26 through FY 2028‑29 projections).

Additional estimated reduction to Other Special Revenue Funds of $4,000 annually in the same period.

Any additional workload for the Office of Program Evaluation and Government Accountability (OPEGA) is expected to be minor and absorbable within existing resources.

Legislative timeline / procedure

Referred to the Committee on Taxation (2/11/2025); Work Session held and reported OTP‑AM.

Committee Amendment A adopted; passed both chambers “to be enacted” in late May/June 2025.

Placed on Special Appropriations Table then enacted in concurrence.

Signed into law by the Governor on July 1, 2025.

Practical effect

LD 554 lowers the state tax barrier for owners choosing to convert housing businesses to resident‑owned cooperatives or municipal ownership by exempting up to $750,000 of gain on the transfer, creating a modest ongoing revenue cost to the state but potentially encouraging preservation of affordable housing through cooperative and municipal conversions.