An Act To Exempt Military Pensions from Income Tax (\
Maine Legislature, Session 124, LD 0196
Committee: Taxation
Sponsors: KNIGHT, WATSON, DAVIS, CHASE, CLARK, GILES, LANGLEY, WEAVER

Legislative Document 
No. 196 
H.P. 161 
House of Representatives, January 21, 2009 
An Act To Exempt Military Pensions from Income Tax 
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Reference to the Committee on Taxation suggested and ordered printed. 
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Presented by Representative KNIGHT of Livermore Falls. 
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MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representative WATSON of Bath, Senator DAVIS of Cumberland and 
Representatives: CHASE of Wells, CLARK of Millinocket, GILES of Belfast, LANGLEY of 
Ellsworth, PlOTT! of Unity, SIROIS ofTumer, WEAVER of York. 
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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: 
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For each individual who is a primary recipient of pension benefits under an 
employee retirement plan, the amount of military retirement benefits under a military 
retirement plan for military personnel to the extent included in federal adjusted gross 
income plus an amount that is the lesser of: 
(1) Six 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 
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(2) The aggregate of pension benefits under employee retirement plans included 
in the individual's federal adjusted gross income, excluding military retirement 
benefits under a military retirement plan for military personnel. 
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 1 (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 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 net). "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; 
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Sec. 2. Application. This Act applies to tax years beginning on .or after January 1" 
2009. 
SUMMARY 
This bill exempts from the state income tax all military pension and survivors' 
benefits for military personnel received by a Maine resident as a result of service in the 
active or reserve components of the Army, Navy, Air Force, Marines or.Coast Guard. 
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