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Bill

LD 856

An Act To Phase Out The Income Tax

132nd Legislature (2025-2026) Introduced by Sue Bernard and 8 co-sponsors

Maine bill proposes phasing out state income tax, eliminating roughly 40% of state revenue; failed in Senate with 19-14 vote.

Placed in Legislative Files (DEAD)
#incometax #phasedout #relief
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WeVote Research Nonpartisan
Bill Summary · LD 856

Legislative bill overview

LD 856 proposes to phase out Maine's state income tax, which currently provides roughly 40% of the state's general fund revenue. The bill was introduced by Republican legislators but did not advance, receiving a "Ought Not to Pass" recommendation that was accepted by the Maine Senate on June 11, 2025, effectively ending the proposal.

Why this is important

Income tax elimination would fundamentally reshape Maine's fiscal structure, requiring either significant cuts to state services (education, healthcare, infrastructure) or replacement revenue through other means like sales tax increases or new fees. This represents a core ideological debate about the size and scope of state government and how public services should be funded.

Potential points of contention

  • Revenue replacement: Eliminating ~$3+ billion in annual income tax revenue would require either deep service reductions or unpopular alternative taxes, creating difficult tradeoffs
  • Distributional impact: Income tax elimination typically benefits higher earners; replacement taxes (like sales tax) disproportionately affect lower and middle-income households
  • Implementation timeline: Phasing out over time versus immediate elimination creates different fiscal planning challenges and economic impacts

Compiled from official sources — confirm details with the bill’s official record.

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