Maine allows a pension income deduction for certain retirement benefits that are included in your federal adjusted gross income (AGI). For tax year 2025 returns filed in 2026, the maximum pension income deduction is $48,216 per taxpayer. The deduction must be reduced by the total amount of taxable and nontaxable Social Security benefits and Railroad Retirement benefits received during the year.
In addition, for tax years beginning on or after January 1, 2025, the pension income deduction is subject to an income-based phaseout when federal adjusted gross income exceeds certain thresholds.
What Retirement Income Qualifies?
Generally, qualifying retirement income may include:
- Pension payments reported on Form 1099-R
- Annuity income that qualifies for the Maine pension income deduction
- Other eligible retirement plan distributions included in federal adjusted gross income
Beginning with tax years starting on or after January 1, 2025, distributions received before age 55 generally do not qualify for the pension income deduction unless they are part of a series of substantially equal periodic payments made over the life expectancy of the recipient or the joint life expectancy of the recipient and designated beneficiary.
How Do I Enter the Pension Income Deduction?
In the Maine return, navigate to:
To access this entry, go to:
- Maine
- Subtractions from Income
- Pension Income Deduction
Enter the total amount of eligible pension income for each taxpayer in the field labeled:
Taxpayer/Spouse - Total Eligible Pensions Other Than SSA/RRB/Military
Do not include:
- Social Security benefits (SSA)
- Railroad Retirement benefits (RRB)
- Military retirement income
- Retirement income that does not qualify for the Maine pension income deduction
Important Notes
- The pension income deduction is calculated separately for each taxpayer on a joint return.
- Social Security and Railroad Retirement benefits reduce the amount of pension income deduction that may be claimed.
- Taxpayers with higher federal adjusted gross income may receive a reduced deduction due to the income phaseout rules. For tax year 2025, the phaseout begins when federal AGI exceeds:
- $125,000 for Single or Married Filing Separately
- $187,500 for Head of Household
- $250,000 for Married Filing Jointly or Surviving Spouse
Refer to your Forms 1099-R and other retirement income statements when determining the amount of eligible pension income to enter.