An Act To Provide an Inflation Adjustment to the Income Tax Exemption for Private, Public and Military Pensions
Maine Legislature, Session 123, LD 0206
Committee: Taxation
Sponsors: CROCKETT, CLARK, FLETCHER, MILLS, PATRICK, TIBBETTS, WATSON, DAMON, MARRACHE

Legislative Document 
No. 206 
H.P.177 
House of Representatives, January 16,2007 
An Act To Provide an Inflation Adjustment to the Income Tax 
Exemption for Private, Public and Military Pensions 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative CROCKETT of Augusta. 
Cosponsored by Senator SA V AGE of Knox and 
1lJ~ 
/J7.11!tU~ 
MILLICENT M. MacFARLAND 
Clerk 
Representatives: CLARK of Millinocket, FLETCHER of Winslow, MILLS of Farmington, 
PATRICK of Rumford, TIBBETTS of Columbia, WATSON of Bath, Senators: DAMON of 
Hancock, MARRACHE of Kennebec. 
Printed on ft'(;ydeu p3per 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRS A §S122, sub-§2, ~, as amended by PL 2005, c. 218, §53, is 
further amended to read: 
M. 
For each individual who is a primary recipient of pension benefits under an 
employee retirement plan, an amount that is the lesser of: 
(1) Six thousand dollars plus an annual inflation adjustment 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 pension benefits under employee retirement plans included 
in the individual's federal adjusted gross income. 
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. 
"Pension benefits" means employee retirement plan benefits reported as pension or 
annuity income for federal income tax purposes. "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 40 I (a), Section 403 or Section 45 7(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 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. 
"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 457(f) of the Code. 
Pension 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. "Inflation adjustment" means 
the Consumer Price Index as defined in section 5402, subsection 1 for the year ending 
on the September 30th immediately preceding the calculation date, divided by the 
Consumer Price Index for the prior year ending September 30th. 
On or about 
November 15th of each year, the State Tax Assessor shall calculate the adjusted 
deduction amount by multiplying the deduction in effect on the calculation date by 
the inflation adjustment. If the adjusted deduction amount is not a multiple of $10, 
any increase must be adjusted to the next lowest multiple of $10 and become 
effective for the following income tax year; 
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, 2007. 
Page I - 123LR0782(OI)-1 
SUMMARY 
This bill requires the amount of the deduction from income received as pension 
benefits to be adjusted annually based on the Consumer Price Index.