An Act To Eliminate the State Income Tax on Maine Public Employees Retirement System Pensions
Maine Legislature, Session 129, LD 0162
Committee Amendment CA_A_S418 (Senate)
Amends: 36 MRSA §5122

COMMITTEE AMENDMENT "A" to S.P. 49, L.D. 162, Bill, "An Act To 
Eliminate the State Income Tax on Maine Public Employees Retirement System 
Pensions" 
Amend the bill by striking out the title and substituting the following: 
'An Act To Provide Equity in the State Income Tax Deduction for Certain Public 
Employees Retirement System Pensions' 
Amend the bill by striking out everything after the enacting clause and inserting the 
following: 
'Sec. 1. 36 MRSA §5122, sub-§2, 1 C-1 is enacted to read: 
C-1. For tax years beginning on or after January 1, 2020: 
(1) For each individual who is a primary recipient of civil service retirement plan 
benefits, the lesser of: 
(a) The aggregate of civil service retirement plan benefits included in the 
individual's federal adjusted gross income: and 
(b) The civil service pension deduction amount 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: 
(2) For purposes of this paragraph, "civil service pension deduction amount" 
means: 
(a) For the tax year beginning in 2020, $15,000: 
(b) For the tax year beginning in 2021, $20,000: 
(c) For the tax year beginning in 2022. $25,000: 
(d) For the tax year beginning in 2023. $30,000: and 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" A "to S.P. 49,L.D. 162 ( $·· L-{) b~) 
(e) For tax years beginning on or after January l, 2024, the maximum annual 
benefit that an individual retiring at the retirement age, as defined in 42 
United States Code, Section 416(1), during January of the tax year may 
receive under the federal Social Security Act; and 
(3) For the purposes of this paragraph, "primary recipient" and "retirement plan 
benefits" have the same meaning as under paragraph M-2, subparagraph (2); 
Sec. 2. 36 MRSA §5122, sub-§2, ,rM-2, as amended by PL 2017, c. 170, Pt. H, 
§3, is further amended to read: 
M-2. For tax years beginning on or after January 1, 2016: 
(1) For each individual who is a primary recipient ofretirement plan benefits, the 
reduction is the sum of: 
(a) Excluding military retirement plan benefits, an amount that is the lesser 
of: 
(i) The aggregate of retirement plan benefits under employee retirement 
plans or individual retirement accounts included in the individual's 
federal adjusted gross income; and 
(ii) The pension deduction amount reduced by the total amount of the 
individual's social security benefits and railroad retirement benefits paid 
by the United States, and, for tax years beginning on or after January 1, 
2020, also reduced by any civil service retirement plan benefits for which 
a subtraction is allowed under paragraph C-1, but not less than $0; and 
(b) An amount equal to the aggregate of retirement benefits under military 
retirement plans included in the individual's federal adjusted gross income; 
and 
(2) For purposes of this paragraph, the following terms have the following 
meanings. 
(a) "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 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. 
(a-1) "Civil service retirement plan benefits" means: 
(i) Retirement plan benefits received under Title 5, Part 20 excluding 
pick-up contributions for which a subtraction is allowed under paragraph 
E:m 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" ft "to S.P. 49, L.D. 162 
f3) 
(ii) Retirement plan benefits received under a retirement plan of another 
state government. local government or the Federal Government as a 
result of service for that government. 
"Civil service retirement plan benefits" does not include benefits from a 
military retirement plan. 
(b) "Individual retirement account" means an individual retirement account 
under Section 408 of the Code, a Roth IRA under Section 408A of the Code, 
a simplified employee pension under Section 408(k) of the Code or a simple 
retirement account for employees under Section 408(p) of the Code. 
(c) "Military retirement plan" means retirement plan benefits received as a 
result of service in the active or reserve components of the United States 
Army, Navy, Air Force, Marines or Coast Guard. 
(d) "Pension deduction amount" means $10,000. 
( e) 
"Primary recipient" means the individual upon whose earnings or 
contributions the retirement plan benefits. or civil service retirement plan 
benefits. are based or the surviving spouse of that individual. 
(f) 
"Retirement plan benefits" means employee retirement plan benefits, 
except pick-up contributions for which a subtraction is allowed under 
paragraph E, reported as pension or annuity income for federal income tax 
purposes and individual retirement account benefits reported as individual 
retirement account distributions 
for 
federal 
income tax purposes. 
"Retirement plan benefits" does not include distributions that are subject to 
the tax imposed by the Code, Section 72(t) or. for tax years beginning on or 
after January 1. 2020. civil service retirement plan benefits for which a 
subtraction is allowed under paragraph C-1; 
Sec. 3. Appropriations and allocations. 
The following appropriations and 
allocations are made. 
ADMINISTRATIVE AND FINANCIAL SERVICES, DEPARTMENT OF 
Revenue Services, Bureau of 0002 
Initiative: Provides one-time funding for computer programming costs to add an 
additional line to the individual income tax form. 
GENERAL FUND 
All Other 
GENERAL FUND TOTAL 
2019-20 
$0 
$0 
2020-21 
$11,000 
$11,000 
Amend the bill by relettering or renumbering any nonconsecutive Part letter or 
section number to read consecutively. 
COMMITTEE AMENDMENT 
COMMITTEE AMENDMENT" f:t "to S.P. 49, L.D. 162 (':) ,Lj/ 
SUMMARY 
This amendment establishes an income tax exemption for civil service retirement 
plan benefits that do not participate in the federal Social Security program in recognition 
of the fact that the current law provides an income exemption for all Social Security 
benefits in addition to a $10,000 pension exemption for retirement plan benefits. The 
amendment phases in greater parity in treatment of the 2 types of pension systems by 
increasing the civil service pension deduction amount by $5,000 per year until 2024 when 
it reaches the maximum annual benefit that an individual retiring at retirement age would 
receive under the federal Social Security Act. 
This amendment also adds an appropriation for computer programming costs to add 
an additional line to the individual income tax form. 
FISCAL NOTE REQUIRED 
(See attached) 
COMMITTEE AMENDMENT 
Approved: 03/03/20 ;Wac.. 
LD 162 
LR 167(03) 
An Act To Eliminate the State Income Tax on Maine Public Employees Retirement System Pensions 
Fiscal Note for Bill as Amended by Committee Amendment "/f U,Jl//~ 
Committee: Taxation 
Net Cost (Savings) 
General Fund 
Appropriations/ Allocations 
General Fund 
Revenue 
General Fund 
Other Special Revenue Funds 
Fiscal Detail and Notes 
Fiscal Note Required: Yes 
Fiscal Note 
FY 2019-20 
$0 
$0 
$0 
$0 
FY 2020-21 
$7,037,250 
$11,000 
Projections 
FY 2021-22 
$13,015,000 
$0 
Projections 
FY 2022-23 
$18,430,000 
$0 
($7,026,250) 
($13,015,000) 
($18,430,000) 
($273,750) 
($685,000) 
($970,000) 
The bill creates an income tax deduction for civil service retirement plan benefits and will reduce General Fund 
revenue by $7,026,250 in fiscal year 2020-21 and reduce Local Government Fund revenue by $273,750 in fiscal year 
2020-21. The bill includes a one-time General Fund appropriation to the Department of Administrative and Financial 
Services of $11,000 in fiscal year 2020-21 for computer programming costs to add an additional line to the individual 
income tax form. 
LR0167(03) - Fiscal Note - Page I of I