AUGUSTA, Maine — The Internal Revenue Service said Friday it informed Maine officials the $450 heating aid payments given to Mainers in early 2023 are not subject to federal tax.
The clarification came after Gov. Janet Mills’ administration complained Tuesday to the IRS about its apparent plan to federally tax the $450 winter energy relief payments distributed to more than 880,000 Mainers between January and March.
Finance Commissioner Kirsten Figueroa had told acting IRS Chief Counsel William Paul that Maine officials believed the agency’s guidelines published this summer indicated the $450 payments were not subject to federal tax. But Figueroa said the IRS reversed itself and verbally informed Maine’s tax agency on Dec. 7 the relief checks would be taxable.
However, the IRS said Friday it has assured Maine officials the payments will not be subject to federal tax.
“The IRS understands the concerns of Maine residents and assures taxpayers that their state payments to lower the cost of winter energy bills are not taxable under federal law,” IRS spokesperson Karen Connelly said, adding the agency also gave Maine officials “an explanation about the underlying legal provisions on this complex issue.”
The Legislature and Mills, a Democrat, approved the relief payments in early January as part of a $473 million heating aid bill. The checks, based on 2021 income tax returns, went to single filers making less than $100,000 and those filing as heads of households making less than $150,000. The cutoff was $200,000 for couples filing jointly.
The payments are also not subject to state tax.
“We are thankful to the IRS for arriving at the right decision and for their prompt response as Maine taxpayers prepare for the upcoming tax season,” Mills and Figueroa said in a joint statement.
