An Act To Exempt Retirement and Pension Income from the State Income Tax
Maine Legislature, Session 122, LD 0319
Committee: Taxation
Sponsors: GLYNN, CAMPBELL, CRESSEY, GAGNON, JACOBSEN

Legislative Document 
No. 319 
H.P.243 
House of Representatives, January 19,2005 
An Act To Exempt Retirement and Pension Income from the State 
Income Tax 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative GLYNN of South Portland. 
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MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: CAMPBELL of Newfield, CRESSEY of Cornish, Senator 
GAGNON of Kennebec and Representative: JACOBSEN of Waterboro. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §SI22, sub-§2. ,M. as amended by PL 2003, c. 
391, §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) 
iiiiH Thirty-five thousand dollars reduced by the 
total 
amount 
of 
the 
individual's 
social 
security 
benefits and railroad retirement benefits paid by the 
United States, but not less than $0. 
The reduction 
does 
not 
apply 
to 
benefits 
paid 
under 
a 
military 
retirement plan; or 
(2) 
The 
aggregate 
of 
retirement plans included 
adjusted gross income. 
benefits 
under 
employee 
in the individual's 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 
6ee~ien Section 457(b) 
plan are not 
eligible for the deduction provided by this paragraph if 
they are made prior to age 55 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 ... 
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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. 
Benefi ts 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. This Act applies to tax years beginninC! 
on or after January 1, 200S. 
SUMMARY 
Current law provides a deduction from the state income tax 
for an amount that is the lesser of the first $6,000 of income 
from 
certain public, 
private 
and 
military 
pensions 
or 
the 
aggregate of benefits received under an employee retirement plan 
included in federal adjusted gross income. 
This bill increases the deduction for pension income to 
$35,000 for tax years beginning January 1, 2005 and broadens the 
definition 
of 
"employee 
retirement 
plan" 
to 
include 
other 
retirement plans 
such as so-called Roth 
IRAs 
and simplified 
employee pension plans.