Maine Offers Tax Credit for Student Loan Payments
By: Kevin Henderson
The average age of a Maine resident is currently forty-four years old, which is five years older than the national average.
In an attempt to attract and retain your professionals, Maine recently instituted a tax credit plan called the Opportunity Maine Tax Credit. The program provides tax credits for student loan payments made by young professionals and recent graduates who live and work in Maine.
The program has several requirements. First, it applies only to degrees granted in the year 2008 or later so any degree earned before 2008 will not be eligible. The program’s incentives also vary by the type of degree received. The program grants a refundable tax credit to students who hold a degree in a STEM field (Science, Technology, Engineering and Mathematics). For non-STEM graduates, the tax credit is non-refundable.
A refundable tax credit is great – it means that if the loan payment credit is greater than your actual tax bill, you would receive a check back from the State of Maine for the difference. In contrast, if the credit is nonrefundable, you will not be paid back if your loan payment credit exceeds your actual tax bill.
These credits sound terrific and for some people, they are extremely valuable but before you pack the car for a move to Maine, you need to be aware that Maine has a state income tax rate of 7.15% for incomes exceeding $50,000. Massachusetts, Rhode Island and Connecticut would impose taxes of 5.10%, 3.75% and 5.50% respectively on a similar income so you’d have to do the math to see if a move would really be in your best interest.
To learn more about Maine’s new program, visit this page.