Renewable Chemicals Tax Credit: Renewable Chemicals Tax Credit (2024)
Maine · Maine Revenue Services · Used for tax years 2024
The Maine Renewable Chemicals Tax Credit Worksheet for tax year 2024 calculates the credit for qualifying renewable chemicals produced in Maine. It reports production quantities, related taxable income, and any applicable ownership share in a pass-through entity, and is enclosed
Who files this form
Use this worksheet to claim the 2024 Maine Renewable Chemicals Tax Credit if you produce qualifying renewable chemicals in Maine. Owners of eligible pass-through entities, such as partnerships, LLCs, S corporations, and trusts, may claim a credit in proportion to their ownership interests.
To qualify, the renewable chemical must:
- Meet the definition in 7 United States Code § 8101(14).
- Be produced through, or rely on, biological conversion, thermal conversion, or both, of renewable biomass, or be a cellulose nanomaterial.
- Have at least 95% biobased content, established through the required testing.
- Be sold or used to produce chemicals, polymers, plastics, or formulated products, or be sold or used as one of those products.
Chemicals sold or used to produce food, feed, or fuel, or sold as those products, generally do not qualify. The listed exceptions are cellulosic sugars used to produce aquaculture feed and certain noncaloric food additives, supplements, vitamins, nutraceuticals, or pharmaceuticals that are not considered food or feed.
What you'll need
Enclose the completed worksheet and these supporting documents with your return:
- A third-party testing affidavit certifying the percentage of biobased content for each type of renewable chemical. The taxpayer and independent tester must complete the affidavit, and testing must occur at least annually.
- Verification from the Department of Economic and Community Development (DECD) that at least 75% of the employees of contractors hired or retained to harvest the renewable biomass meet the specified Maine Employment Security Law eligibility conditions.
- Documentation supporting the pounds of renewable chemicals entered on line 1a.
- A copy of your federal Schedule K-1 if you claim the credit through a pass-through entity.
- A schedule showing how you calculated line 2a if income from producing renewable chemicals in Maine is less than 100% of your Maine taxable income.
- An additional schedule listing each chemical type and its biobased percentage if you produced more than one type.
You will also need your taxpayer name and EIN or SSN. Pass-through owners must provide the entity's name, EIN or SSN, and their ownership percentage for the tax year.
How to file
Complete the worksheet's questions about the chemical's definition, production method, biomass used, and sale or use. If applicable, describe how the cellulose nanomaterial meets its statutory definition.
Calculate the credit:
- Enter total qualifying pounds produced in Maine on line 1a, rounded to the nearest pound. Multiply by $0.08 on line 1b.
- If claiming through a pass-through entity, multiply line 1b by your ownership percentage on line 1c. Otherwise, leave line 1c blank.
- Enter the related Maine taxable income on line 2a. Pass-through owners enter the related entity income included in their own Maine taxable income.
- For line 2b, divide the gross tax liability by the taxable income shown on your return. Enter the rate as a decimal, then multiply lines 2a and 2b to calculate line 2c.
- On line 3, enter the smaller of line 1b, or line 1c if applicable, and line 2c.
Transfer line 3 to the applicable location:
- Form 1040ME, Schedule A, Lines 7 and 19 Other Tax Credits Worksheet, line 14.
- Form 1040C-ME, Schedule A, line 13.
- Form 1041ME, Schedule A, line 17.
- Form 1120ME, Schedule C, line 1m.
Enclose the worksheet and required supporting documents with your return. The supplied text does not give a mailing address or e-file instructions.
Common mistakes
- Missing attachments: The worksheet requires the testing affidavit, DECD verification, and supporting documentation with the return. Pass-through owners must also attach their federal Schedule K-1.
- Not meeting the biobased-content requirement: The worksheet warns that you do not qualify unless the total biobased content of all renewable chemicals produced in Maine is at least 95%.
- Missing the multiple-chemical schedule: If you produced more than one type, attach a schedule listing each type and its biobased percentage.
- Assuming no further information will be needed: Maine Revenue Services may request additional support for the credit before processing the return.
Questions people ask
How much is the credit?
The credit is 8 cents per pound of qualifying renewable chemical produced in Maine. It is limited to the tax imposed on income from that production and cannot reduce Maine tax liability below zero.
Can I carry forward unused credit?
Yes. Unused credit may be carried forward for up to 10 tax years following the year the credit was generated.
Do I need to report anything to DECD?
Yes. Taxpayers claiming the credit must report the credit amount, the number of direct manufacturing jobs created, and the amount of capital investment in manufacturing to DECD.
Where can I get help?
For DECD verification or reporting questions, call (207) 624-9800. For questions about MRS Rule 818 or calculating the credit, email the Maine Revenue Services Business Tax Unit at corporate.tax@maine.gov.