Maine Expands Student Loan Tax Credit
Maine taxpayers with student loans or family members with student loans should be aware of some new tax credits as they plan their 2022 taxes. The new Student Loan Repayment Tax Credit (SLRTC) replaces the existing Educational Opportunity Tax Credit (EOTC) that has been in effect since 2008. The EOTC was designed to give students at Maine colleges and universities an incentive to stay and start a career in Maine.
The new SLRTC, effective for tax year 2022, expands eligibility to anyone who lives and works in Maine and makes student loan payments for an associate’s, bachelor’s, or graduate degree obtained from any accredited community college, college, or university after December 31, 2007. The credit allows a deduction of up to $2,500 per year and has a lifetime cap of $25,000.
The tax credit only applies to payments made by the taxpayer directly to the lender, not to payments made by another party (such as an employer or family member) on the taxpayer’s behalf. A taxpayer who claims the federal deduction for student loan interest can still claim the Maine credit, but only for amounts included in their federal adjusted gross income. Taxpayers already utilizing the existing program who have unused credit carryover amounts will be able to apply those to the new credit.
If you think you may qualify for this credit or other education tax benefits such as the American Opportunity Tax Credit, the Lifetime Learning Credit, the Student Loan Interest Deduction, or the Tuition and Fees Deduction, contact your Marcum tax professional about how to best utilize these opportunities.