Maine Center for Economic Policy: New Tax Relief Plan Will Disproportionately Benefit Wealthy SeniorsITEP Work in Action
This year, lawmakers included a tax change in the state’s budget that will significantly expand tax benefits for pension recipients in Maine. Beginning in 2023, pension recipients will be allowed to exempt up to $25,000 in pension income from state income taxes, and that amount will increase to $35,000 for tax years 2025 and after. Although efforts to improve economic security of older Mainers should be a priority issue for lawmakers, this policy fails to meet the mark as the benefits are heavily weighted to help wealthy households and the policy comes at a tremendous cost to state resources. Further efforts to expand this exemption beyond what the legislature has already improved would benefit an even wealthier cohort of Mainers and come at even greater cost to revenues.