Technology Tax Credits and Sales Tax Exemptions

Maine offers tax credits and sales tax exemptions for businesses engaged in certain specialized areas. Research Expense Tax Credit In general, R&D tax credits are based on federal IRS rules and applied for as part of a company’s state corporate tax return. The 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 under 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 it can be carried forward for up to 15 years.  Form and Instructions (PDF) . Renewable Chemicals Tax Credit The State of Maine offers a tax credit at $0.08 per pound for the production of renewable chemicals, which are defined to be no less than 95% biobased content; to include and formulated products; and to exclude substances used for fuel, with limited exceptions. Eligibility for this tax credit is certified by DECD. This credit may be carried over for up to 10 years. View the Renewable Chemicals Tax Credit statute .  View the Renewable Chemicals Tax Credit Rule Biofuels Production Tax Credit The State of Maine offers a tax credit of $0.05 per gallon for the production of biofuels. The credit is available to biofuel producers who are certified by the Department of Environmental Protection. This credit may be carried over for up to 10 years. View the Biofuel Production Tax Credit statute . Use this worksheet (PDF) to claim the tax credit. Maine Renewable Energy Equipment Tax Exemption Solar and wind energy equipment, except that of industrial power suppliers, is exempt from local property tax. Taxpayers must apply for the credit by April 1 of the first year the exemption is requested. Find the application form here (PDF) . Sales Tax Exemptions Maine state sales tax exemptions are available for manufacturing, R&D, custom computer programming, fuel & electricity, and biotechnology. Sales tax exemptions are applied either at the time of purchase using an  Industrial Users Blanket Sales Tax Certificate of Exemption (PDF)  or as a refund with the  Refund Form (PDF) . Manufacturing Sales of machinery and equipment used by the purchaser directly and primarily in the production of tangible personal property for later sale or use is eligible for a sales tax exemption. In addition, items consumed or destroyed directly or primarily in production and repair and replacement parts for qualified production equipment are exempt from sales tax. Also, any manufacturer is exempt from paying 95% of the sales tax on fuel and/or electricity used in the manufacturing facility. Research and Development Sales of machinery and equipment used by the purchaser directly and exclusively in research and development is eligible for a sales tax exemption. Custom Computer Programming Any custom computer programming purchased by a business is exempt from sales tax. If a standard program is purchased, then customized, the cost of the standard program would be taxable and the customizing, if separately stated, would be nontaxable. Biotechnology Sales of supplies used by the purchaser directly and primarily in a biotechnology application are eligible for a sales tax exemption. Commercial Agricultural and Aquacultural Production Sales of feed medicines used in commercial agricultural or aquacultural production are exempt from sales or use tax. Sales of depreciable machinery and equipment are also exempt from sales or use tax. The sale of breeding stock and other activities existing under animal agricultural production are also exempt from sales tax.