Printed on recycled paper
132nd MAINE LEGISLATURE
FIRST SPECIAL SESSION-2025
Legislative Document No. 1622H.P. 1076House of Representatives, April 15, 2025
An Act to Exempt Certain Income from State Income Tax
Received by the Clerk of the House on April 11, 2025. 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 ADAMS of Lebanon. Page 1 - 132LR0543(01)
1
2 as amended by PL 2023, c. 523, Pt. B,
3 §1, is further amended to read:
4 M-2. For tax years beginning on or after January 1, 2016 and before January 1, 2026:
5 (1) For each individual who is a primary recipient of retirement plan benefits, the
6 reduction is the sum of:
7 (a) Excluding military retirement plan benefits, an amount that is the lesser of:
8 (i) The aggregate of retirement plan benefits under employee retirement
9 plans or individual retirement accounts included in the individual’s federal
10 adjusted gross income; and
11 (ii) The pension deduction amount reduced by the total amount of the
12 individual’s social security benefits and railroad retirement benefits paid
13 by the United States, but not less than $0; and
14 (b) An amount equal to the aggregate of retirement benefits under military
15 retirement plans included in the individual’s federal adjusted gross income;
16 and
17 (2) For purposes of this paragraph, the following terms have the following
18 meanings.
19 (a) "Employee retirement plan" means a state, federal or military retirement
20 plan or any other retirement benefit plan established and maintained by an
21 employer for the benefit of its employees under the Code, Section 401(a),
22 Section 403 or Section 457(b), except that distributions made pursuant to a
23 Section 457(b) plan are not eligible for the deduction provided by this
24 paragraph if they are made prior to age 55 and are not part of a series of
25 substantially equal periodic payments made for the life of the primary recipient
26 or the joint lives of the primary recipient and that recipient's designated
27 beneficiary.
28 (b) "Individual retirement account" means an individual retirement account
29 under Section 408 of the Code, a Roth IRA under Section 408A of the Code,
30 a simplified employee pension under Section 408(k) of the Code or a simple
31 retirement account for employees under Section 408(p) of the Code.
32 (c) "Military retirement plan" means retirement plan benefits received as a
33 result of service in the active or reserve components of the United States Army,
34 Navy, Air Force, Marines, Coast Guard or Space Force.
35 (d) "Pension deduction amount" means:
36 (i) For tax years beginning prior to January 1, 2022, $10,000;
37 (ii) For tax years beginning in 2022, $25,000;
38 (iii) For tax years beginning in 2023, $30,000; and
39 (iv) For tax years beginning on or after January 1, 2024 and before January
40 1, 2026, the maximum annual benefit that an individual eligible to retire at
41 the retirement age, as defined in 42 United States Code, Section 416(l), as Page 2 - 132LR0543(01)
42 of January 1st of the tax year may receive under the federal Social Security
43 Act and amendments to that Act as of June 28, 2023.
3 (e) "Primary recipient" means the individual upon whose earnings or
4 contributions the retirement plan benefits are based or the surviving spouse of
5 that individual.
6 (f) "Retirement plan benefits" means employee retirement plan benefits,
7 except pick-up contributions for which a subtraction is allowed under
8 paragraph E, reported as pension or annuity income for federal income tax
9 purposes and individual retirement account benefits reported as individual
10 retirement account distributions for federal income tax purposes. "Retirement
11 plan benefits" does not include distributions that are subject to the tax imposed
12 by the Code, Section 72(t);
13 is enacted to read:
14 M-3. For tax years beginning on or after January 1, 2026:
15 (1) For each individual who is a primary recipient of retirement plan benefits, the
16 reduction is the sum of:
17 (a) Excluding military retirement plan benefits, an amount that is the lesser of:
18 (i) The aggregate of retirement plan benefits under employee retirement
19 plans or individual retirement accounts included in the individual’s federal
20 adjusted gross income; and
21 (ii) The pension deduction amount reduced by the total amount of the
22 individual’s social security benefits and railroad retirement benefits paid
23 by the United States, but not less than $0; and
24 (b) An amount equal to the aggregate of retirement benefits under military
25 retirement plans included in the individual’s federal adjusted gross income;
26 and
27 (2) For purposes of this paragraph, the following terms have the following
28 meanings.
29 (a) "Employee retirement plan" means a state, federal or military retirement
30 plan or any other retirement benefit plan established and maintained by an
31 employer for the benefit of its employees under the Code, Section 401(a),
32 Section 403 or Section 457(b), except that distributions made pursuant to a
33 Section 457(b) plan are not eligible for the deduction provided by this
34 paragraph if they are made prior to age 55 and are not part of a series of
35 substantially equal periodic payments made for the life of the primary recipient
36 or the joint lives of the primary recipient and that recipient's designated
37 beneficiary.
38 (b) "Individual retirement account" means an individual retirement account
39 under Section 408 of the Code, a Roth IRA under Section 408A of the Code,
40 a simplified employee pension under Section 408(k) of the Code or a simple
41 retirement account for employees under Section 408(p) of the Code.
1
2 Page 3 - 132LR0543(01)
1 (c) "Military retirement plan" means retirement plan benefits received as a
2 result of service in the active or reserve components of the United States Army,
3 Navy, Air Force, Marines, Coast Guard or Space Force.
4 (d) "Pension deduction amount" means the annual benefit that an individual
5 receives pursuant to an employee retirement plan.
6 (e) "Primary recipient" means the individual upon whose earnings or
7 contributions the retirement plan benefits are based or the surviving spouse of
8 that individual.
9 (f) "Retirement plan benefits" means employee retirement plan benefits,
10 except pick-up contributions for which a subtraction is allowed under
11 paragraph E, reported as pension or annuity income for federal income tax
12 purposes and individual retirement account benefits reported as individual
13 retirement account distributions for federal income tax purposes. "Retirement
14 plan benefits" does not include distributions that are subject to the tax imposed
15 by the Code, Section 72(t);
16 is enacted to read:
17 AAA. For tax years beginning on or after January 1, 2026, any income from tips to the
18 extent included in federal adjusted gross income. As used in this paragraph, "tip" has
19 the same meaning as in Title 26, section 663, subsection 15.
20 is enacted to read:
21 BBB. For tax years beginning on or after January 1, 2026, any income received as
22 overtime pay to the extent included in federal adjusted gross income. As used in this
23 paragraph, "overtime pay" means income paid to an employee in accordance with Title
24 26, section 664, subsection 3.
25
26 This bill allows an individual to deduct from federal adjusted gross income for purposes
27 of determining Maine income taxes all pension income, tip income and overtime income
28 in the same manner as is currently allowed for social security benefits.
26
27
28