Tax committee hears testimony on LD 2010 to update Maine's federal tax conformity date

The joint standing committee on taxation opened a public hearing on LD 2010, a bill to update Maine's statutory reference date to the Internal Revenue Code to Dec. 31, 2025, a step the administration says is needed to consider adopting portions of the 2025 federal reconciliation law commonly cited in testimony as OB 3.

Representative Dan Sayer, who presented the bill on behalf of the Department of Administrative and Financial Services, summarized LD 2010 as “the text of the bill could not be simpler. It changes a single digit from a 4 to a 5,” explaining the date change would allow the state to decide which federal changes to accept or explicitly decouple from.

The administration’s tax-policy staff, represented by Michael Allen, testified in support and described Maine’s fixed-date conformity process. Allen said the Office of Tax Policy is preparing a consolidated conformity report for the committee’s upcoming work session that will detail revenue impacts and identify which federal changes would flow automatically from a date change and which would require separate legislative action.

Proponents testifying in support included Linda Cabrera of the Maine State Chamber of Commerce and John Block of the Maine Society of CPAs. Cabrera told the committee that “R and D immediate expensing is one of the most pro-growth provisions” and argued broad conformity reduces administrative burden for taxpayers and the Maine Revenue Services. Block said CPA practitioners favor conformity because it simplifies returns and avoids the need for separate state depreciation schedules.

Opponents and cautious voices urged selective decoupling. James Maile of the Maine Center for Economic Policy said full conformity “moves in the opposite direction” on fairness and warned several OB 3 provisions skew benefits toward wealthy individuals and larger firms. Maile highlighted accelerated R&D expensing, expansion of the Qualified Small Business Stock exemption, and Opportunity Zone incentives as provisions he recommended the state decouple from or review closely. He cited an estimated fiscal cost of the QSBS expansion at roughly $6–8 million per biennium and said fully decoupling could save about $15 million per biennium; he also noted an estimate that extending Opportunity Zone incentives would cost “about $5 million in FY27, rising to roughly $9.5 million later in the biennium.” Maile and committee members agreed to reconcile differences between that estimate and figures in the Office of Tax Policy’s appendix at the work session.

Committee members pressed administration staff on which items would be direct conformity items and which would require additional statutory changes. Staff said most provisions that affect adjusted gross income would carry forward automatically with a date change; items that change the post-AGI calculation, like tax rates, credits or bonus depreciation, are not automatic and have historically been treated separately. The administration noted the governor’s supplemental budget proposes phasing in some items (for example, aspects of R&D expensing) rather than immediate, full conformity across all provisions.

No formal votes were taken during the public hearing. The committee closed testimony and scheduled work sessions for the following week to review detailed revenue estimates, OPEGA’s briefing, and related budget language (including LD 191). Committee staff said they will provide the consolidated conformity report and be ready to answer technical follow-up questions at the work session.

The committee adjourned the hearing and directed members and interested parties to submit written testimony or follow-up materials for the work session.