Renewable Chemicals Tax Credit: Renewable Chemicals Tax Credit (2025)
Maine · Maine Revenue Services · Used for tax years 2025
The Maine Renewable Chemicals Tax Credit Worksheet for tax year 2025 calculates the credit for qualifying renewable chemicals produced in Maine. It reports production quantities, related Maine taxable income, and any applicable ownership share in a pass-through entity, and is enc
Who files this form
Use this worksheet to claim the 2025 Maine Renewable Chemicals Tax Credit if you produce qualifying renewable chemicals in Maine. Owners of eligible pass-through entities, including partnerships, LLCs, S corporations, and trusts, may claim a credit in proportion to their ownership interests.
A qualifying renewable chemical must meet the definition cited in the worksheet, including these conditions:
- It results from or relies on biological conversion, thermal conversion, or both, of renewable biomass, or it is a cellulose nanomaterial.
- It has at least 95% biobased content, determined by testing representative samples using ASTM International D6866 methods.
- It is sold or used to produce chemicals, polymers, plastics, or formulated products, or sold or used as one of those products.
- It is not sold or used to produce food, feed, or fuel, or sold as food, feed, or fuel. Exceptions include cellulosic sugars used to produce aquaculture feed and certain noncaloric 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 third-party tester must complete the affidavit, and testing must occur at least annually.
- Verification from the Maine Department of Economic and Community Development (DECD) that at least 75% of the employees of any contractor 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.
Also include, when applicable:
- A copy of your federal Schedule K-1 if you claim the credit through a pass-through entity. Enter the entity's name, EIN/SSN, and your ownership percentage on the worksheet.
- 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 content percentage if you produced more than one type.
How to file
Enclose the worksheet and required supporting documents with Form 1040ME, Form 1040C-ME, Form 1041ME, or Form 1120ME, whichever applies.
Enter your name and EIN or SSN, and complete the required information about the chemicals, biomass, and sales or uses. Calculate the credit on lines 1 through 3.
Report the credit from line 3 on the applicable return:
- Form 1040ME: Schedule A, Other Tax Credits Worksheet (for Lines 8 and 20), line 15.
- Form 1040C-ME: Schedule A, line 15.
- Form 1041ME: Schedule A, line 18.
- Form 1120ME: Schedule C, line 1m.
Taxpayers claiming the credit must also report to DECD the credit amount, number of direct manufacturing jobs created, and capital investment in manufacturing. For verification or reporting information, call DECD at (207) 624-9800 or visit maine.gov/decd/business-development and select Financial Incentives and Resources, Financial Incentives, then Additional Tax Credits and Sales Tax Exemptions.
Common mistakes
- Leaving out attachments: The worksheet requires the testing affidavit, DECD verification, and other supporting documentation with your return.
- Claiming the full entity credit as an owner: Pass-through entity owners receive the credit in proportion to their ownership interests and must attach their federal Schedule K-1.
- Ignoring 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%.
- Assuming no further documentation will be needed: Maine Revenue Services may request additional information supporting the credit before it can process the return.
Questions people ask
How much is the credit?
The credit is 8 cents per pound of qualifying renewable chemicals produced in Maine. It is limited to the tax imposed on income from that production and cannot reduce Maine tax liability below zero. Pass-through entity owners adjust the production-based credit for their ownership share.
Can I carry forward unused credit?
Yes. Unused credit may be carried forward for up to 10 tax years following the year it was generated.
How do I calculate the tax rate on line 2b?
Divide the gross tax liability shown on your return by the taxable income shown on that return. Enter the result as a decimal. The worksheet identifies the applicable return lines for each form.
Who can answer questions about the calculation or testing rule?
Email the Maine Revenue Services Business Tax Unit at corporate.tax@maine.gov for questions about calculating the credit or MRS Rule 818.