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Maine Nonprofits Celebrate Passage of Blanket Sales Tax Exemption in Supplemental Budget

Maine Nonprofits Celebrate Passage of Blanket Sales Tax Exemption in Supplemental Budget

PORTLAND - Last week, through the supplemental budget, Governor Janet Mills signed into law a blanket sales tax exemption for 501(c)(3) nonprofits operating in Maine.

Of the 47 states with sales tax, Maine has been among only 17 — and the only one in New England — without a blanket exemption for 501(c)(3)nonprofits, according to a report released by Maine Revenue Services (MRS). MRS estimates this newly enacted policy could benefit more than 5,000 charitable nonprofits across the state, and that when fully enacted (starting January 1, 2025), Maine nonprofits will be able to redirect as much as $10 million annually to their community missions.

“As costs and demand for services both continue to rise, this policy change will have immediate impact, enabling Maine nonprofits to better serve their communities,” said Mary Alice Scott, Public Affairs Manager at Maine Association of Nonprofits (MANP).

MANP led efforts to mobilize hundreds of nonprofits, including key partners at Maine Coast Heritage Trust and Cultural Alliance of Maine, to communicate the importance of the issue to policymakers. Many nonprofits told stories of how dollars spent on sales tax would make a significant difference if redirected to their missions and their communities. 

“The passing of the blanket sales tax exemption is critical for the sustainability of nonprofits like ours, as we offer programs that are always free and open to the public,” said Jordia Benjamin, Executive Director of Indigo Arts Alliance. “We currently pay sales tax on essential program supplies, such as workshop materials and studio equipment for a variety of programs led by our artists in residence. In addition to our artist-led workshops, we also purchase and give away thousands of books each year as part of our Beautiful Blackbird Children’s Book Festival. The exemption will save us time and money – which will expand our accessibility across the state of Maine.”

The historic law for nonprofits has taken many years to come to fruition. The list of sales tax exemptions has been growing since the sales and use tax was first created in 1951. MANP, and many partners over the years, have worked to raise awareness of the inefficient, confusing, and inequitable. 

In 2023, Rep. Melanie Sachs (D-Freeport), introduced a bill to study the cost and impact of a blanket sales tax exemption for 501(c)(3) nonprofits, which supporters say will go a long way toward making the system fairer and easier to understand. The results of this study were released in early 2024. 

“During my first term in the legislature, I served on the Taxation Committee, and noticed how inefficient and inequitable the sales tax exemption system was in Maine,” said Sachs. “I am so pleased that after reviewing the results of the MRS study, Governor Mills included the exemption in this year’s supplemental budget, which will support thousands of nonprofits in every corner of Maine.”

Charitable nonprofits across many different mission areas will benefit from the new policy, including organizations like Boots2Roots, which helps active duty military members transition to post-military life in Maine.

"The existing sales tax exemption list includes some veterans' groups, but many others—like Boots2Roots, still didn't qualify," said Bill Benson, Executive Director of Boots2Roots.

Organizations who qualify under the new blanket exemption will still need to apply for a sales tax exemption certificate. The updated application will be available later this year on the Maine Revenue Services website.For more information about MANP, visit www.NonprofitMaine.org. 

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About MANP

Since 1994, Maine Association of Nonprofits (MANP) has grown to become Maine’s go-to resource for the tools, knowledge, and connections nonprofits need to create change. With a growing statewide membership of more than 1,000 nonprofits and 150 community partners in all 16 counties, MANP is a vocal advocate for the work and worth of Maine nonprofits, championing their vital contribution to the economy and quality of life in our state. MANP builds the capacity of individual organizations through leadership and management training, online resources, and cost-saving member benefits. By weaving connections among new and seasoned nonprofit professionals and volunteers, MANP lifts up effective, innovative practices and fosters collaboration. MANP cultivates productive relationships across the nonprofit, business, government, and philanthropic sectors so together they can advance solutions to pressing issues and opportunities facing Maine.