Change on Tap for Charitable Contributions on Tax Returns

AUGUSTA — Mainers who make charitable contributions will have a new process to follow when claiming the donations on their Maine tax returns.


The change, which is the result of a tax reform law passed by the Legislature in June, will benefit some but not others, said Michael Allen, director of research for Maine Revenue Services.

In the past, charitable donations have been accounted for on federal tax returns by reducing the taxpayer’s adjusted gross income. The federal adjusted gross income amount is then transferred to the Maine return.

Under the new tax law, which reduced Maine’s top income tax from 8.5 percent to 6.5 percent and broadened sales and use taxes, the process will be different at the state level, but the federal return will remain the same. Because the new law eliminates itemized deductions for most Mainers, those claiming charitable contributions will now receive a direct tax credit that varies according to their income.

Maine’s tax reform law includes an “alternate household credit,” which amounts to a rebate of 5.5 percent of a lower-earning taxpayer’s itemized deductions. For taxpayers earning more than $250,000 a year, the rebate is 5 percent. According to Dennis Doiron, director of income and estate taxes for Maine Revenue Services, that means taxpayers will be paid back between 5 and 5.5 percent of their charitable contributions.

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