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An Act To Exempt from Taxation Certain Out-of-state Pensions
Be it enacted by the People of the State of Maine as follows:
Sec. 1.  36 MRSA §5122, sub-§2, ¶QQ  is enacted to read:
 
QQ.  For tax years beginning on or after January 1, 2020, to the extent included in federal adjusted gross income, an amount equal to the amount of the taxpayer's contribution to a pension plan. This paragraph does not apply to amounts deducted under paragraph M-1 or to a taxpayer who does not meet the requirements of subparagraph (1).
 
(1) The subtraction allowed pursuant to this paragraph is permitted only for a taxpayer who:
 
(a) Made all of the contributions to the pension plan while residing in another jurisdiction that allows a similar modification by a former resident of this State for contributions made to a pension plan while a resident of this State; and
 
(b) Paid income taxes on the amount contributed to the pension plan.
 
(2) As used in this paragraph, unless the context otherwise indicates, the following terms have the following meanings.
 
(a) "Another jurisdiction" means another state or territory of the United States, a political subdivision of such a state or territory and the District of Columbia.
 
(b) "Contribution" means the total amount paid by a taxpayer to a pension plan divided by the life expectancy of that member, as determined by the United States Social Security Administration.
 
(c) "Employee retirement plan" has the same meaning as in paragraph M-1.
 
(d) "Individual retirement account" has the same meaning as in paragraph M-1.
 
(e) "Pension plan" means an employee retirement plan or an individual retirement account.
 
SUMMARY
This bill exempts from Maine income tax certain income from out-of-state pensions in order to avoid double taxation of that income. The exemption is only for the amount of the contribution made by the taxpayer divided by the life expectancy of the taxpayer and applies only if the income is included in federal adjusted gross income and not deducted under the general pension deduction.
In order to qualify for the exemption, the contribution must have been made using income on which income tax was paid and is available only if the state in which the taxpayer resided at the time of the contribution provides a similar exemption to a former resident of Maine.