I appreciate the work of Rep. John “Jack” Ducharme, R-Madison, and the Maine Legislature’s attempt to lower the state income tax burden for retirees as outlined in a recent op-ed (“Mainers are overtaxed – do the math,” April 23), through enactment of the Pension Income Deduction. Unfortunately, the Pension Income Deduction is helpful only to a point.
After speaking with Maine Revenue Services, I learned that Social Security income offsets the Pension Income Deduction. For 2023, you can deduct up to $30,000 of pension income, including individual retirement income (IRA) distributions and 401(k) distributions from your Maine state income. However, Social Security income offsets pension income deductibility. For example, with an average payout of $21,000 of Social Security income per year, that leaves only $9,000 deductibility of pension income due to the offset. So, unfortunately, in this example, any pension, IRA or 401(k) distribution above $9,000 in 2023 will be taxable.
Maine advertises that Social Security income is not taxed and that also up to $30,000 of pension income is not taxable in Maine, but this is not accurate as long as the Social Security income offsets the Pension Income Deduction. I would like to believe that this offset was an oversight by the Legislature. I ask the Maine Legislature to pass legislation to separate the Pension Income Deduction from Social Security income, thus making the Pension Income Deduction a true reality for Maine retirees. I believe programs such as the Pension Income Deduction encourage Maine retirees to remain here and continue to be strong contributors to our communities.
Lee Tabenken
Falmouth
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