Many of you have reached out regarding the changes to senior property tax relief. While this information is in my monthly newsletter, which I encourage you all to sign up for, I wanted to put the information out separately for everyone.
In 2022, the Legislature enacted LD 290, which created the Property Tax Stabilization Program.
The program allowed residents 65 and over to freeze their property taxes if they were permanent Maine residents, had owned a home for 10 years, and were eligible for the homestead exemption.
While very well-intentioned, the current Property Tax Stabilization Program had significant flaws. The program did not target relief to those who need it most. There were no income limits or limits based on property value or assets. This allowed all qualifying Mainers to potentially use the program while passing the costs along to other taxpayers. The price tag for this program, as it was written, would increase exponentially every year and was simply not economically sustainable. Furthermore, the administrative burden it put on the municipalities to implement it looked very much like an unfunded mandate, and our municipalities were buckling under the resource shortage and software incompatibility, in order to process them all.
It was clear we needed a fix. One that would effectively target the population who needs it most, our lower-income seniors, and one that could be implemented in a fiscally responsible way that also did not put the burden on the municipalities. To fix this problem the Legislature repealed the Property Tax Stabilization Program and expanded two existing programs:
Property Tax Fairness Credit: Eligible Maine taxpayers may receive a portion of the property tax or rent paid during the tax year on the Maine individual income tax return whether they owe Maine income tax or not. If the credit exceeds the amount of your individual income tax due for the tax year, the excess amount of credit will be refunded to you.
Change: Increased the Property Tax Fairness Credit for Mainers 65 or older from $1,500 to $2,000, and establish a new Maximum Benefit Base for those 65 or older at $4,000 and index it to inflation.
Property Tax Deferral Program: The State Property Tax Deferral Program is a lifeline loan program that can cover the annual property tax bills of Maine people who are ages 65 and older or are permanently disabled and who cannot afford to pay them on their own. The loan program allows Maine’s most vulnerable community members to age in place and ensures that property taxes are still delivered to municipalities, requiring repayment of the loan once the property is sold or becomes part of an estate.
Change: Raise the maximum income for the tax deferral program from $40,000 to $80,000 and increase the maximum asset test to $100,000.
While the expansion of the two programs will go into effect this year, property tax bills have already gone out and many folks were counting on the previous program. The stabilization program has been repealed but will still be available for this year.
