Maine Lifts Cap on Charitable Contribution Deduction

(But Not Right Away)

Stan Rose, Managing Director, Tax Practice
May 2, 2014

On April 30, a new law change launched a phase-out of a very unpopular restriction on Maine’s itemized deductions.

Beginning with 2013 tax returns, filers of Maine individual tax returns became subject to a new cap that limited total Maine itemized deductions to a maximum of $27,500, regardless of actual expenditures or the amount of itemized deductions allowed on their federal returns.  Many parties pointed out that this could have a pronounced and unfavorable impact on donations to charities in Maine, potentially burdening government resources and taxpayers.

Yesterday, L.D. 1664, “An Act To Encourage Charitable Contributions to Nonprofit Organizations” became state law, implementing a delayed exception to the $27,500 cap for charitable contributions.  It works like this:

  1. For 2014 and 2015, the existing cap is unchanged: Maine itemized deductions cannot exceed $27,500 in total.
  2. For 2016, Maine itemized deductions may equal $27,500 plus another $18,000 of charitable contributions, as long as those contributions also are included in federal itemized deductions.
  3. For 2017 and forward, Maine itemized deductions may equal $27,500 plus unlimited charitable contributions, as long as those contributions also are included in federal itemized deductions.

If you have any questions, please contact Stan Rose or your BNN tax advisor at 1.800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.