An Act To Increase the State Income Tax Exemption for Retired Workers in the Maine State Retirement System to the Same Level as That of Retirees under the Social Security System
Maine Legislature, Session 122, LD 0356
Committee: Taxation
Sponsors: PARADIS, GAGNON, ADAMS, FISHER, GROSE, PATRICK, PILON, RINES, SMITH, TWOMEY
Amends: 36 MRSA §5122

Legislative Document 
No. 356 
H.P.269 
House of Representatives, January 25,2005 
An Act To Increase the State Income Tax Exemption for Retired 
Workers in the Maine State Retirement System to the Same Level as 
That of Retirees under the Social Security System 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative PARADIS of Frenchville. 
Cosponsored by Senator GAGNON of Kennebec and 
7J'l~ /J7.1llP£~ 
Mll..LICENT M. MacFARLAND 
Clerk 
Representatives: ADAMS of Portland, FISHER of Brewer, GROSE of Woolwich, PATRICK 
of Rumford, PILON of Saco, RINES of Wiscasset, SMITH of Van Buren, TWOMEY of 
Biddeford. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
39l, 
Sec. 1. 36 MRSA §5122, sub-§2, ,M, as amended by PL 2003, c. 
§5, is further amended ,to read: 
M. 
For 
each individual who 
is 
a 
primary recipient of 
benefits under an employee retirement plan, an amount that 
is the lesser of: 
( 1) 
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e ~ -- -t-be- - -i-nd-i,.J,f.idua-l-'--G- - -seeial- - -6-e£-\:l-£-i-t-y- - -be-ne-f-it.--G- - -asel 
FailFeael-~e~4~effieR~-~-i-t-6-~~~-~a&-YaiEeel-~EaEesT 
bQt--~~-~-~£~£--$gT 
The 
maximum social security 
benefit reduced by the total amount of the individual's 
sociQl 
security 
benefits 
and 
railroao 
retirement 
benefi ts paid by the United States, but not less than 
$0, 
except 
that this 
reduction 
does 
not 
apply 
to 
benefits paid under a military retirement plant. 
The 
assessor by September 15th of each year shall determine 
the amount of the deduction and incorporate the change, 
if any, 
into the income tax forms, 
instructions and 
withholding tables for the taxable year; or 
(2) 
The 
aggregate 
of 
retirement plans included 
adjusted gross income. 
benefits 
under 
in the individual's 
employee 
federal 
For purposes of this paragraph, the following terms have the 
following 
meanings. 
"Primary 
recipient" 
means 
the 
individual upon whose earnings the employee retirement plan 
benefits 
are 
based 
or 
the 
surviving 
spouse 
of 
that 
individual. 
"Employee 
retirement 
plan" 
means 
a 
state, 
federal or military retirement plan or any other retirement 
benefit plan established and maintained by an employer for 
the benefit of its employees under the Code, Section 401(a), 
Section 403 or Section 457(b), 
except that distributions 
made pursuant to a section 457(b) plan are not eligible for 
the deduction provided by this paragraph if they are made 
prior 
to 
age 
and 
are 
not 
part 
of 
a 
series 
of 
substantially equal periodic payments made for the life of 
the primary recipient or the joint lives of the primary 
recipient 
and 
that 
recipient's 
designated 
beneficiary. 
"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 
or 
an 
ineligible 
deferred 
compensation 
plan 
under 
Section 
(f) 
of 
the 
Code. 
Benefits under an employee retirement plan do not include 
... 
.. 
• 
distributions that are subject to the tax imposed by the 
Code, 
Section 
72(t). 
"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; 
Sec. 2. Application. 
That section of this Act that amends the 
Maine Revised Statutes, Title 36, 
section 5122, 
subsection 2, 
paragraph M applies to tax years beginning on or after January 1, 
2005. 
SUMMARY 
Current law provides a deduction from the state income tax 
for the first $6,000 of income from certain public, private and 
military pensions. 
This bill increases 
the 
amount of the deduction 
amount of the maximum federal tax exemption for social 
benefits reduced by any social security benefits and 
retirement benefits actually received by the taxpayer. 
to the 
security 
railroad