Pine Tree Development Zones (PTZ)
Tax rebate and reimbursement program offered by the State of Maine. Redevelopment in the PTZ reduces the tax burden for qualified businesses through a variety of exemptions, reimbursements, and credits:
- Corporate Income Tax Exemption — Qualified companies will receive a 100% Maine State corporate income tax exemption for years 1-5 of their Maine based operation. Qualified companies will receive a 50% Maine State corporate income tax exemption for years 6-10 of their Maine based operation.
- Sales Tax Exemption — Qualified companies will receive a 100% State of Maine sales tax exemption on all equipment and building supplies for years 1-10 of their Maine-based operation.
- Employment Tax Increment Financing — Qualified companies will be reimbursed 80% of a qualified employees’ personal state income tax obligation. For example, if an employee’s State personal income tax obligation for a year is $2,000, the State will return $1,600 to the company. If a company has ten similar employees, the company will receive $16,000. If a company has 100 similar employees, the company will receive $100,000. The company receives this benefit every year for 10 years.
Employment Tax Increment Financing (ETIF)
The growth of businesses allows lives to grow, too. That’s why we reward Maine businesses that create at least 5 new, high-¬‐quality jobs with Employment Tax Increment Financing.
An ETIF-approved business may be reimbursed 30, 50 or 75 percent (80% in Pine Tree Zones) of the state income tax withholdings from the net new payroll for up to ten years.
The amount of annual payment is based upon the actual number of qualified employees above the company’s base level of employment. The company may not be reimbursed from ETIF for any period of time when employment, income and/or employee benefits fail to meet the minimum qualification criteria. (Please note that ETIF cannot be taken concurrently with the Jobs & Investment Tax Credit.)
Additional Technology and other Tax Credits:
Certified Media Production Tax Credit
Maine is easy on the eyes, as well as the budgets of media production companies. The state provides media production companies with a credit equal to the state’s income tax, related to the income from the certified media production. The credit may not reduce the entity’s tax liability below zero and unused credit amounts may not be carried over to prior or future years. Businesses claiming the Pine Tree Development Zone income tax credit under 36 M.R.S.A. § 5219-W are not eligible for this credit.
Maine Seed Capital Tax Credit
The Maine Seed Capital Tax Credit is equal to 40% of qualified investment (60% if the investment is in a business located in a certain high-unemployment area). However, taxpayers can only take 25% of the credit in the year of the investment and 25% in each of the following three years. The amount of the credit taken in any one year cannot exceed 50% of the tax otherwise due. The credit cannot be carried back, but can be carried forward up to 15 years.
Sales Tax Exemptions
Maine provides state sales tax exemptions for manufacturing, R&D, custom computer programming, fuel & electricity, biotechnology and clean fuel vehicle sales.
Technology Tax Credits
While Maine’s natural beauty remains the state’s top selling point for tourists, its commitment to technological advances and research prove that Maine is more than just a “Vacationland.”
Maine features several tax credit programs specifically designed to encourage the growth of technology companies in the state including the Research Expense Tax Credit, R&D Super Credit, High-Technology Investment Tax Credit, and Sales Tax exemptions for technology companies.
Research Expense Tax Credit
The Research Expense Tax Credit is based on a percentage of the federal credit for increasing research activities. The credit is limited to 5% of the excess qualified research expenses over the previous three-year average plus 7.5% of the basic research payments in IRC §41(e)(1)(A). The credit is further limited to 100% of the first $25,000 in tax liability plus 75% of the tax liability in excess of $25,000. The credit cannot be carried back, but can be carried forward for up to 15 years. Eligible businesses include any business that engages in research and development activities in Maine that meet the definitions in Section 41 of the Internal Revenue Code. Such expenses include certain in- house and contract research expenses if they relate to discovering information that is technological in nature and intended for use in developing a new or improved business component.
R&D Super Credit
The R&D Super Credit is based on qualified research payments exceeding 150% of the average for the three-year period prior to the effective date of the credit. The credit is limited to 50% of the tax otherwise due after all other credits. Further, the credit cannot reduce tax liability below the amount due the previous year after credits. The credit cannot be carried back, but can be carried forward for up to five years. Eligible businesses include businesses that qualify for the research expense credit and whose qualified research expenses conducted in Maine for the taxable year exceed 150% of the average research expenses for the three taxable years prior to September 1997.
Finance Authority of Maine (FAME)
The Finance Authority of Maine (FAME), a quasi-governmental agency, has several financing options available to companies designed to provide commercial grade credits with access to attractive interest rate structures.
The State of Maine offers a variety of direct loans that are intended to help businesses in certain industries or to help further the environmental goals of the state. Click here for a complete list.
Some commonly used options:
- The Secondary Market Tax Exempt Bond Program– This program provides tax-exempt interest rate bond financing for manufacturing borrowers.
- The Secondary Market Taxable Bond Program– This program provides long-term bond financing on loans of for real estate and machinery and equipment acquisitions.
- The Major Business Expansion Bond Program– This program provides long-term, credit-enhanced financing up to $25,000,000 at taxable bond rates for businesses creating or retaining 50 jobs and long-term, tax-exempt bond rates on bonds of up to $10,000,000 that are used to finance manufacturing expansions.
- The Maine Seed Capital Tax Credit Program– This program is designed to encourage equity and near-equity investments in eligible Maine businesses, directly and through private venture capital funds. FAME may authorize State income tax credits to investors for up to 60% of the cash equity they provide to eligible Maine businesses. Investments may be used for fixed assets, research or working capital.
Tax Increment Financing (TIF)
A Tax Increment Financing (TIF) District is an area within a municipality that is designated as a development district to allow the municipality to financially support a business development project. The municipality may disburse the tax increment directly to the investing business to help pay project costs, use it to retire bonds it issues as part of the project, or retain it for allowable economic development purposes
Maine Technology Institute (MTI)
The Maine Technology Institute (MTI) is a publicly funded, non-profit corporation that offers early-stage capital and commercialization assistance. Assistance is in the form of competitive grants, loans and equity investment for the research, development and application of technologies that create new products, processes and services, generating high-quality jobs across Maine.
MTI offers the following award programs:
- TechStart Grants — Up to $5,000 per project are awarded twelve times a year to develop new ideas and new products.
- Seed Grants — Up to $25,000 per project are awarded three times a year for product and business development, business planning or commercialization.
- Development Loan — Up to $500,000 per project are awarded three times a year for R&D of new and/or enhanced products, processes or services leading to commercialization.
Since 1999, MTI has funded innovative technologies across the state to help accelerate commercial success in Maine’s technology sectors.
New Market Tax Credits (NMTC)
In addition to the Federal Program, Maine has created its own New Markets Tax Credit Program. The two programs can be used together in areas designated by the federal government as eligible for the New Market Tax Credit Program.
The Federal Program: This program benefits companies locating in eligible census tract locations in Maine. A business is only required to pay 70 percent of loans that are funded by NMTC investors.
The State Program: This program provides refundable state tax credits of up to 39% to investors in qualified community development entities (CDEs) that reinvest in certain businesses in eligible low-income communities in Maine. The program is modeled after the federal New Markets Tax Credit Program, and is administered by the Finance Authority of Maine, in cooperation with Maine Revenue Services and the Maine Department of Economic and Community Development. Learn more about Maine New Markets Capital Investment Program.
Community Development Block Grants (CDBG)
Economic Development Program
The Economic Development Program provides gap funding in the form of grants and loans for communities to assist businesses in the creation/retention of jobs; at least 51% of those jobs must be taken by low and moderate-income persons. The maximum CDBG participation per job created or retained with EDP $30,000.
The Program provides a state grant to a municipality for direct business support for non-capital equipment, land and site improvements, rehabilitation (renovation and upgrade) or construction of commercial or industrial buildings, job training, working capital, and capital equipment in support of an identified business. — maximum grant award: $1,000,000.
An eligible municipality must apply for and receive State CDBG program funds.
All CDBG funded activities must meet one of three National Objectives of the program.
These objectives are:
- Benefit to low and moderate income persons
- Prevention and elimination of slum and blight conditions
- Meeting community development needs having a particular urgency
More about CDBGs
(In addition to this economic development CDBG, there is a CDBG specifically designed for workforce development. Please click here for more information).
For information on these and other programs, please contact Maine & Company.
Maine Quality Centers
Under the Maine Quality Centers program, businesses — or consortia of small businesses — creating a minimum of eight new full-time jobs are eligible for customized recruitment, high-performance skills, or customized technical training.
CDBG Workforce Development Grant Program
The Workforce Development Grant Program (WDG) provides funding for creating a new or enhancing an existing training program to address the skills shortage faced by Maine employers. At least 51% of beneficiaries of this program must be low to moderate income.
Maximum grant award: $100,000
Maine works together with employers to cover the costs of customized, on-the-job training and classroom programs aimed at providing employees with professional credentials.
There are various workforce-training programs — funded by both the State and Federal Governments — available throughout the state. Please contact Maine & Company for more information about specific regions.
Overcoming workforce shortages requires short, mid, and long term planning. The programs listed above combined with other resources addresses these short and mid term concerns. Long term, Maine has some of the best K-12 and 2- and 4-year colleges to ensure that companies have a long term supply of talented workers to hire.