Taxation committee votes to expand Maine Educational Opportunity Tax Credit to help more students pay off loan debt
On Wednesday, January 27, the Joint Standing Committee on Taxation voted 11-0 “ought to pass as amended” on LD 798, An Act to Improve the Educational Opportunity Tax Credit. Sponsored by Sen. Matthew Pouliot (R-Kennebec), the bill sa amended simplifies the current Educational Opportunity Tax Credit.
A bi-partisan working group met over the summer, following discussion at the legislative committee level last session. Several bills were introduced last session to make modifications to the current credit. The committee felt that the best path forward was to establish a working group to discuss combining the various bills into one. The amended version would establish a simplified refundable tax credit of $2,500 that would be available to anyone who graduated after 2007, is employed, and is a Maine resident. The current credit is limited to STEM students.
This amendment would limit STEM recipients to the $2,500 credit. The credit allowed for qualified individuals is the lesser of the amount paid on eligible education loans during the taxable year and 15% of the outstanding eligible education loan debt on the date the first education loan payment is made after a degree is earned, which could be worth $6,000 or $7,000, according to committee discussion.
The amended version also removes the current credit for businesses that pay off student loan debt for their employees. Sen. Pouliot reported that Governor Janet Mills has committed to inserting a $2,000 credit directly into the supplemental budget bill. Under the current credit, 13,000 employees are receiving the credit. The amended version will expand that number three times.
There was some discussion surrounding the grandfathering of STEM recipients to the original credit amounts. However, there were no commitments made at this time.
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