An Act To Exempt Unemployment Benefits from State Income Tax
Maine Legislature, Session 121, LD 1745
Committee: Taxation
Sponsors: CLARK, DAVIS, CARR, DUNLAP, GOODWIN, JENNINGS, PATRICK, USHER, EDMONDS
Amends: 36 MRSA §5122

Legislative Document 
No. 1745 
H.P.1267 
House of Representatives, December 22,2003 
An Act To Exempt Unemployment Benefits from State Income Tax 
(EMERGENCY) 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203. 
Received by the Clerk of the House on December 17, 2003. Referred to the Committee on 
Taxation pursuant to Joint Rule 308.2 and ordered printed pursuant to Joint Rule 401. 
Presented by Representative CLARK of Millinocket. 
Cosponsored by Senator DAVIS of Piscataquis and 
/7j~ 
1J7·711~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: CARR of Lincoln, DUNLAP of Old Town, GOODWIN of Pembroke, 
JENNINGS of Leeds, PATRICK of Rumford, USHER of Westbrook, Senator: EDMONDS of 
Cumberland. 
Printed on recycled paper 
Emergency preamble. Whereas, Acts of the Legislature do not 
become effective until 90 days after adjournment unless enacted 
as emergencies; and 
Whereas, unemployment 
benefits 
are 
currently 
subject 
to 
Maine income tax; and 
Whereas, unemployment benefits are usually less than the 
amount the unemployed person was earning; and 
Whereas, income tax on unemployment benefits further reduces 
the amount of income to those persons who are unemployed, thereby 
adding further pecuniary injury; and 
Whereas, in the judgment of the Legislature, these facts 
create an emergency within the meaning of the Constitution of 
Maine 
and 
require 
the 
following 
legislation 
as 
immediately 
necessary for the preservation of the public peace, health and 
safety; now, therefore, 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §5122, sub-§2, ~Q, as corrected by ,RR 2003, c. 
1, §38, is amended to read: 
Q. 
A fraction of any amount previously added back by the 
taxpayer 
to 
federal 
adjusted 
gross 
income 
pursuant 
to 
subsection 1, paragraph N. 
(1) 
With respect to property first placed in service 
during taxable years beginning in 2002, the adjustment 
under this paragraph is available for each year during 
the 
recovery 
period, 
beginning 
years 
after 
the 
beginning of the taxable year during which the property 
was first placed in service. 
The fraction is equal to 
the amount added back under subsection 1, paragraph N 
with respect to the property, divided by the number of 
years in the recovery period minus 2. 
(2) 
With 
respect 
to all other 
property, 
for 
the 
taxable year 
immediately following the taxable year 
during which the property was first placed in service, 
the fraction allowed by this paragraph is equal to 5°", 
of the amount added back under subsection 1, paragraph 
N with respect to the property. 
For each subsequent 
taxable year during the recovery period, the fraction 
is 
equal 
to 
95% 
of 
the 
amount 
added 
back 
under 
subsection 1, paragraph N with respect to the property, 
divided by the number of years in the recovery period 
minus 2. 
In the case of property expensed pursuant to Section 179 of 
the Code, 
the term "recovery period" means 
the recovery 
period that would have been applicable to the property had 
Section 179 not been applied; aRe 
Sec. 2. 36 MRSA §5122, sub-§2, 1fT, as reallocated by RR 2003, 
c. 1, §37, is amended to read: 
T. 
For income tax years beginning on or after January l, 
2002, 
an 
amount 
equal 
to 
the total 
premiums 
spent 
for 
long-term 
care 
insurance 
policies certified under 
Title 
24-A, 
section 5075-A as long as the amount subtracted is 
reduced 
by 
the 
long-term 
care 
premiums 
claimed 
as 
an 
itemized deduction pursuant to section 5125T; and 
Sec. 3. 36 MRS A §5122. sub-§2.1fU is enacted to read: 
U. 
Unemployment benefits. 
Sec. 4. Application. 
This Act applies to tax years beginning 
on or after January 1, 2004. 
Emergency clause. 
In view of the emergency cited in the 
preamble, this Act takes effect when approved. 
SUMMARY 
This bill exempts 
from income, 
for 
Maine 
income tax, 
unemployment benefits, 
purposes of computing 
beginning January 1, 
2004.