An Act To Exempt Military Pensions from State Income Tax
Maine Legislature, Session 121, LD 1010
Committee: Taxation
Sponsors: McLAUGHLIN
Amends: 36 MRSA §5122

12lst MAINE LEGISLATURE 
Legislative Document 
No. 1010 
H.P.731 
House of Representatives, February 25,2003 
An Act To Exempt Military Pensions from State Income Tax 
Reference to the Committee on Taxation suggested and ordered printed. 
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MILLICENT M. MacFARLAND 
Clerk 
Presented by Representative McLAUGHLIN of Cape Elizabeth. 
Under suspension of the rules, cosponsored by Representatives: CRESSEY of Baldwin, 
HEIDRICH of Oxford, Senator DOUGLASS of Androscoggin and 
Representatives: BARSTOW of Gorham, BIERMAN of Sorrento, BLISS of South Portland, 
CANAVAN of Waterville, CARR of Lincoln, COLLINS of Wells, CROSTHWAITE of 
Ellsworth, DAVIS of Falmouth, EDER of Portland, GERZOFSKY of Brunswick, GLYNN of 
South Portland, GREELEY of Levant, LANDRY of Sanford, LA VERRIERE-BOUCHER of 
Biddeford, LERMAN of Augusta, MAKAS of Lewiston, McCORMICK of West Gardiner, 
McKEE of Wayne, McKENNEY of Cumberland, McNEIL of Rockland, NORBERT of 
Portland, O'BRIEN of Lewiston, PERCY of Phippsburg, SMITH of Monmouth, THOMPSON 
of China, WATSON of Bath, Senators: BROMLEY of Cumberland, DAMON of Hancock, 
EDMONDS of Cumberland, HALL of Lincoln, MAYO of Sagadahoc, ROTUNDO of 
Androscoggin. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §5122, sub-§2, 1fM, as amended by PL 2001, c. 
396, §34 and affected by §50, is further amended to read: 
M. 
An 
amount, 
for each recipient of benefits under 
an 
employee retirement plan, that is the lesser of: 
(1) 
Six thousand dollars reduced by the total amount 
of the primary recipient's social security benefits and 
railroad retirement benefits paid by the United States, 
but not less than $OT--~Re-~~~~~~~~-a~~±Y-Ee 
eeaeEits-pais-HaseF-a-militaFY-FetiFemeaE-plaa; or 
(2) 
The aggregate of benefits received by the primary 
recipient under employee retirement plans and included 
in federal adjusted gross income. 
For purposes of this paragraph, "employee retirement plan" 
means a stateT or federal eF-miliEaFY retirement plan or any 
other retirement benefit plan established and maintained by 
an employer for the benefit of its employees under Section 
401(a), 
Section 
or 
Section 
457(b) 
of 
the 
Code. 
"Employee retirement plan" does not include an individual 
retirement account under Section 408 of the Code, a Roth IRA 
under 
Section 
408A 
of 
the 
Code, 
a 
rollover 
individual 
retirement 
account, 
a 
simplified 
employee 
pension 
under 
Section 408 (k) of the Code, 
a military retirement plan as 
defined 
in 
paragraph 
T 
or 
an 
ineligible 
deferred 
compensation plan under Section 457 (f) of the CodeT---F-eF 
pHtpeses-e~-~~~-~~~-~~~~it~~-~~~~a~-~laa~-meaa6 
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FeseFve-£e~e£~~-~--~-AFffiYr-NavY7-~~-~~,~aFi~&-eF 
beast-GHaFs; 
Sec. 2. 36 MRSA §5122, sub-§2, 1f1fR and S, as enacted by PL 
2001, c. 714, Pt. AA, §4, are amended to read: 
R. 
For tax years beginning in 2005, 2006 or 2007, an amount 
equal to 1/3 of any amount added back to federal adjusted 
gross income by the taxpayer for the 2003 tax year pursuant 
to subsection 1, paragraph N, except with respect to 3-year 
property, in which case this paragraph does not apply to 
2006 or 
2007 
tax years 
and the amount to be subtracted 
pursuant to this paragraph in the 2005 tax year is an amount 
equal to the amount added back pursuant to subsection 1, 
paragraph N for tax years beginning in 2003; aas 
S. 
For tax years beginning in 2006, 2007 or 2008, an amount 
equal to 1/3 of any amount added back to federal adjusted 
Page l-LR0638(1) 
gross income by the taxpayer for the 2004 tax year pursuant 
to subsection 1, paragraph N, except with respect to 3-year 
property, in which case this paragraph does not apply to 
2007 
or 
2008 
tax years 
and the amount to be subtracted 
pursuant to this paragraph in the 2006 tax year is in an 
amount equal to the amount added back pursuant to subsection 
1, paragraph N for tax years beginning in 2004T; and 
Sec. 3. 36 MRSA §5122, sub-§2, fT is enacted to read: 
T. 
For tax years beginning on or after January 1, 2004, an 
amount equal to benefits paid under a military retirement 
plan. 
For purposes of this paragraph, "military retirement 
plan" means benefits received as a result of service in the 
active or reserve components of the Army, Navy, Air Force, 
Marines or Coast Guard. 
SUMMARY 
This bill exempts from the state income tax all military 
pension benefits received by a Maine resident as 
a result of 
service in the active or reserve components of the Army, Navy, 
Air Force, Marines or Coast Guard. 
Since the effect of this bill 
is 
to totally exempt military pension benefits, 
the express 
exclusion of military pension benefits from the offset for social 
security 
and 
railroad 
retirement 
benefits 
from 
the 
$6,000 
deduction allowed for other pension plans is removed.