Fair taxes

Legislation provides $107 million in direct property tax refunds and reductions

Growth in local property taxes is placing many Maine families under financial stress. Though property taxes are assessed locally, the Legislature passed legislation in January 2005 to send additional revenues to cities and towns to relieve pressure on the local property taxpayer.

To distribute the responsibility more fairly, the Legislature passed legislation to provide tax reductions and refunds to individual taxpayers.

The Legislature is fighting Increases in LOCAL Property Taxes by:

• Providing direct and immediate property tax reductions to every Maine homeowner and refunds to as many as 220,000 eligible homeowners and renters.
  
  
• Capping local spending to encourage cities and towns to keep spending in line.



• Sending the largest ever increase in state aid to local education to enable cities and towns to lower their property taxes.

The Legislature sent cities and towns the largest increase in education funding in the state’s history — $250 million in FY 2006 and FY 2007. That’s in addition to another $107 milion in direct property tax reductions — $72 million more Homestead funding and $35 million more for the Circuit Breaker. By 2009, the state will be covering 55 percent of the cost of local education.

Because of the Circuit Breaker program and the increased Homestead exemption, and because many towns chose to pass on the additional school funding revenue to taxpayers as was intended, many people are getting meaningful refunds this year and will pay hundreds of dollars less in taxes next year. Every Maine homeowner and many renters will get some break.

Did you know that as of Aug. 1, 2005, many more middle-income Mainers became eligible for the Circuit Breaker property tax rebate program? And that the maximum benefit doubled to $2,000?

Thanks to the passage of property tax legislation in January, households with incomes up to $99,500 can apply for tax or rent refunds. An additional 60,000 Mainers are now eligible for the Circuit Breaker program, making the refund available to one out of every four Maine households. Even middle-income families are now eligible for hundreds of dollars in refunds.

Did you know that the Homestead Exemption program was also expanded significantly?

Every Maine homeowner can now get an exemption from the taxes on the first $13,000 of (full) home value. In towns that passed on additional state revenues to homeowners, as was the intent of the legislation, homeowners should see reductions of roughly $100 to $200. The amount depends on whether your city or town raised, lowered, or left unchanged the mil rate.

No matter what happened to the mil rate in your town, you will pay less than you would have in local taxes because of the Legislature's raising of the exemption statewide.

About Circuit Breaker

(Maine Residents Property Tax and Rent Refund Program)

Apply for this one immediately! Your refund will come as soon as it is processed! The Maine Residents Property Tax and Rent Refund Program existed before, but was for a smaller group of Mainers. Now, if you earn up to $75,000 as an individual, or $100,000 per family, and you spend more than 4 percent of your income on property taxes or 20 percent on rent, then you are eligible.

Single Homeowners
A single homeowner whose 2004 income was $74,500 or less is eligible for the program and if their 2004 property taxes exceeded four percent of their income.

For example, a single person with income of $15,000 a year—but who pays $2,900 in property taxes—would receive a $2,000 rebate check.

Married Homeowners
A married couple or homeowner with dependents is eligible for the program if their combined income for 2004 was up to $100,000 and if their 2004 property taxes exceeded four percent of their income.

For example, a married couple with income of $50,000 — but paying $3,300 in property taxes—could be eligible to receive more than $1,000 back from the state.

Renters
Those paying more than 20% of their 2004 income in rent could also see money back from the state under the program. In one example, a single person making $30,000—but who pays $13,200 in rent (with heat included)—could receive a rebate check back from the state in the amount of $522.

The program is administered by Maine Revenue Services. In order to receive the benefits, renters and homeowners must apply for the program by filling out an application.

Income requirements are based on Maine Adjusted Gross Income plus the addition of a number of items that are untaxed by the state.

Apply online, and get additional information and requirements by going to the Maine Tax and Rent Refund Program Web site.

You may also call Maine Revenue Services at (207)-626-8475 for assistance. Application forms are also available through your local state representative or senator, at your local municipal office, or by calling Revenue Services.

Completed applications for the program are due each year by May 31. But your refund will come as soon as it is processed, so apply now!

About the Homestead Exemption

Property tax relief legislation passed in January raised the exemption to $13,000 for every Maine homeowner (primary residences only).

In Lewiston, for example, every homeowner will see a property tax reduction of $309.32. In Brunswick, it will be almost $200.

Homeowners already enrolled in the Homestead Exemption program do not need to do anything. The increased exemption will automatically take effect.

Those not already enrolled in the program should visit their local municipal office to fill out the application, or download a Homestead Exemption form from the Maine Revenue Services web site to mail or take into your local town office.