An Act To Increase the Maximum Pension Deduction for State Income Tax
Maine Legislature, Session 130, LD 0136
Committee: Taxation
Sponsors: HANLEY, KEIM
Amends: 36 MRSA §5122, 36 MRSA §5403

Legislative Document
No. 136
H.P. 92
House of Representatives, January 21, 2021
An Act To Increase the Maximum Pension Deduction for State 
Income Tax
Received by the Clerk of the House on January 19, 2021.  Referred to the Committee on 
Taxation pursuant to Joint Rule 308.2 and ordered printed pursuant to Joint Rule 401.
ROBERT B. HUNT
Clerk
Presented by Representative HANLEY of Pittston.
Cosponsored by Senator KEIM of Oxford.
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §5122, sub-§2, ¶M-2, as amended by PL 2017, c. 170, Pt. H, 
§3, is further amended by amending subparagraph (2), division (d) to read:
(d)  "Pension deduction amount" means $10,000, except that, for tax years 
beginning on or after January 1, 2021 but before January 1, 2026, "pension 
deduction amount" means the pension deduction amount applicable to the 
preceding tax year increased by $5,000.  For tax years beginning on or after 
January 1, 2026, "pension deduction amount" means $35,000.
Sec. 2.  36 MRSA §5403, sub-§7, as enacted by PL 2017, c. 474, Pt. B, §24, is 
amended to read:
7.  Personal exemptions.  Beginning in 2018 and each year thereafter, by the dollar 
amounts contained in section 5126‑A, subsection 1, except that for the purposes of this 
subsection, notwithstanding section 5402, subsection 1-B, the "cost-of-living adjustment" 
is the Chained Consumer Price Index for the 12-month period ending June 30th of the 
preceding calendar year divided by the Chained Consumer Price Index for the 12-month 
period ending June 30, 2017; and
Sec. 3.  36 MRSA §5403, sub-§8, as enacted by PL 2017, c. 474, Pt. B, §24, is 
amended to read:
8.  Personal exemption phase-out.  Beginning in 2018 and each year thereafter, by 
the dollar amount of the applicable amounts specified in section 5126‑A, subsection 2, 
paragraphs A, B and C, except that for the purposes of this subsection, notwithstanding 
section 5402, subsection 1-B, the "cost-of-living adjustment" is the Chained Consumer 
Price Index for the 12-month period ending June 30th of the preceding calendar year 
divided by the Chained Consumer Price Index for the 12-month period ending June 30, 
2017.; and
Sec. 4.  36 MRSA §5403, sub-§9 is enacted to read:
9.  Pension deduction.  Beginning in 2025 and each year thereafter, by the pension 
deduction amount defined in section 5122, subsection 2, paragraph M-2, subparagraph (2), 
division (d) with respect to tax years beginning on or after January 1, 2026, except that for 
the purposes of this subsection, notwithstanding section 5402, subsection 1-B, the 
"cost-of-living adjustment" is the Chained Consumer Price Index for the 12-month period 
ending June 30th of the preceding calendar year divided by the Chained Consumer Price 
Index for the 12-month period ending June 30, 2025.
SUMMARY
This bill increases the maximum annual income tax pension deduction amount for 
nonmilitary retirement pensions from $10,000 to $35,000 over a 5-year period beginning 
with the 2021 tax year.  The $35,000 pension deduction amount that applies after the 2025 
tax year is subject to an annual inflation adjustment.