An Act To Exempt Unemployment Benefits from State Income Tax
Maine Legislature, Session 122, LD 0332
Committee: Taxation
Sponsors: CLARK, STRIMLING, SMITH, TUTTLE, SNOWE-MELLO
Amends: 36 MRSA §5122

Legislative Document 
No. 332 
H.P.255 
House of Representatives, January 20,2005 
An Act To Exempt Unemployment Benefits from State Income Tax 
(EMERGENCY) 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative CLARK of Millinocket. 
Cosponsored by Senator STRIMLING of Cumberland and 
!r/~ 
1I1.7l!p£~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: SMITH of Van Buren, TUTTLE of Sanford, Senator: SNOWE-MELLO of 
Androscoggin. 
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 wi thin 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. 1[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 
dur ing 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 dur ing the recovery period, the fraction 
is 
equal 
to 
95°'0 
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. 
Page l-LR1549(1) 
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; aBa 
Sec. 2. 36 MRSA §5122, sub-§2, Jr, as amended by PL 2003, c. 
70S, §12 and affected by §14, is further amended to read: 
T. 
For income tax years beg inning on or after January I, 
2002 
and before January 1, 
2004, 
an amount equal to the 
total premiums spent for long-term care insurance policies 
certified under Title 24-A, section S07S-A as long as the 
amount subtracted is reduced by the long-term care premiums 
claimed as an itemized deduction pursuant to section S12S. 
For income tax years beginning on or after January 1, 2004, 
an amount equal to the total premiums spent for qualified 
long-term care insurance contracts certified under Title 
24-A, section S07 S-A, 
as long as the amount subtracted is 
reduced by any amount claimed as a deduction for federal 
income tax purposes in accordance with the Code, 
Section 
162(1) 
and by the long-term care premiums 
claimed as 
an 
itemized deduction pursuant to section S12ST; and 
Sec.3. 36 MRSA §5122, sub-§2, ~U is enacted to read: 
U. 
Unemployment benefits. 
Sec. 4. Application. 
This Act applies to tax years beginning 
on or after January I, 200S. 
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, 
200S. 
purposes of computing 
beginning January I,