Maine Residents Will Benefit from Lower Income Tax and Heating Costs in 2016 | Financial Buzz

Maine Residents Will Benefit from Lower Income Tax and Heating Costs in 2016

Maine residents had reasons to cheer as tax cuts promise better times in the year ahead. Lawmakers in the state had earlier passed legislations which have taken effect from Jan 1 of this new year.

Income tax rates to drop, death tax to go

The highest income tax slab which is currently taxed at 7.95 percent will see a drop to 7.15 percent. In addition, the highest slab will be applicable for anyone earning over USD 37,500 per annum, up from the current USD 20,900 mark.

Aligning with federal tax policy, Maine lawmakers also approved a change which will see about USD 5.5 million dollars worth of estate become exempt from the death tax. Current state exemptions are at USD 2 million. With this change, it is set to increase to more than twice its current levels.

Home-owners to benefit as heating oil prices drop

The bulk of homes in the state use oil for heating, so the dip in heating oil prices is a reason for much celebration. Kerosene prices fell to USD 2.44 a gallon, propane was steady at USD 2.21 a gallon. According to data from the EIA, a saving of as much as USD 450 can be expected over the winter months, on an average, with this decline in prices. Heating oil expenses amounted to an average of about USD 1400 nationally, between the months of October and March.

With global oil prices on the decline, Maine has seen the average oil price drop to as low as USD 1.77 per gallon in the southwest and USD 1.83 a gallon for the state as a whole. The average just a week ago was USD 1.86 a gallon and USD 1.92 a fortnight ago.

Salex tax net widens, 5.5 rate to become permanent

Several hundred services and products that had hitherto been exempt from sales tax will now be taxed. Businesses that have been subject to a 5.5 percent sales tax for over two years now and were anticipating a return to its previous levels of 5 percent will not get respite as the state has ruled to make the higher rate permanent. Hotels will also see their lodging tax rate go up to 9 percent from the current 8 percent rate. With these changes the state hopes to make up some of what it will lose on collections due to the new income tax rates.