With property values on the rise and inflation pressures, property taxes have increased across all 16 counties in Maine, making it tough for households to manage their finances. However, pinpointing the reasons behind these rising costs and addressing them has been a longstanding challenge for state officials.
In response, Congress set up a 13-member task force last year comprising lawmakers, public members, and experts to develop recommendations aimed at alleviating the property tax burden.
The Real Estate Property Tax Relief Task Force has put together several proposals after holding six meetings that will extend into 2025.
In its interim report, the task force outlined 10 suggestions, which include modifying existing tax credits and exemptions, adjusting tax payment structures for residents, and reassessing a few important issues. This report, completed in January, was made public last week, just before the House tax committee’s meeting last month.
Here are some notable recommendations from the task force:
1. Allow Smaller, More Frequent Property Tax Payments
Currently, property taxes in Maine are typically paid in two lump sums each year—one in the fall and another in the spring. The task force proposed that permitting smaller, more regular payments could aid residents in better budgeting for these expenses.
Some towns, like Kennebunkport, Rockport, and Bath, already offer a program called “Tax Club,” where residents can pay their taxes in installments over several months without interest, as long as the payments are made on time.
The task force suggested that further discussions with local government leaders might clarify potential obstacles to establishing more “Tax Clubs” and whether any legislative modifications could help make these programs more accessible.
2. Revise Property Tax Fairness Deduction
The task force unanimously recommended that the tax committee enhance the property tax fairness deduction. This assistance offers eligible taxpayers a refund based on the amount of property tax or rent they paid in a given year, depending on their income levels.
According to the task force, this deduction is currently “the most targeted tool for relief available to lawmakers.” Depending on income, residents may be eligible for up to $1,000 or $2,000 for those aged 65 and above.
The committee advised that efforts should be made to apply this credit directly at the time of property tax payment. Right now, taxpayers must wait until filing their annual returns, which can take weeks or even months.
3. Amend Homestead Exemption
Several adjustments were recommended for Maine’s homestead exemption, which allows qualifying homeowners to reduce the taxable value of their primary residence by up to $25,000, thereby lowering their property tax burden.
The exemption amount residents can claim is influenced by their town’s certification ratio—the assessed value of a property as a percentage of its fair market value, which differs among municipalities.
For context, if the qualification ratio is set at 100, eligible residents can claim the full $25,000 exemption. However, if it’s 80, they can only claim $20,000. The task force largely advocated for increasing this exemption amount, noting that it has been capped since 2020 and suggesting that it should be indexed to inflation.
Furthermore, should this deduction be raised, the task force wants the state to fully reimburse municipalities for any deficits resulting from these changes. Currently, the state only reimburses local governments for 76% of the lost revenue from the Homeownership Tax Credit, and there is also support from the task force for increasing that reimbursement rate.
4. Lower Local Government Costs
The task force highlighted the potential for cost savings through sharing resources and equipment among municipalities. They pointed to successful partnerships, like Cumberland County’s community assessment program and the shared use of Two Bridges Regional Jail by Lincoln and Sagadahoc counties, as examples of what can already be achieved.
The group emphasized that Congress should encourage such collaborations, although no specific methods were suggested for how to facilitate this.
5. Additional Suggestions
The task force also recommended exploring new ways to inform Maine residents about existing property tax relief programs. For instance, including information flyers with property tax bills could enhance education around available resources.
Moreover, they proposed the establishment of a working group to evaluate whether current programs and exemptions are functioning effectively. The task force plans to meet at least six more times through 2026 and is currently waiting for additional data from a commissioned study, with results anticipated in May.
