Committee unanimously supports Bellows bill to increase fairness for retired state employees and teachers

A bill by Sen. Shenna Bellows, D-Manchester, to eliminate the state income tax on retirement benefits for public employees including retired firefighters, law enforcement and teachers was approved unanimously by the Legislature’s Taxation Committee on Tuesday.

Under current Maine law, the State of Maine does not charge state income tax on Social Security benefits but does charge a state income tax on public pension benefits over $10,000. The bill – LD 162 “An Act To Eliminate the State Income Tax on Maine Public Employees Retirement System Pensions” –as amended, would create parity between public and the private sector retirees by increasing the pension deduction for all public pension income.

“It’s unfair to tax firefighters, teachers and law enforcement in their retirement when people who retire from the private sector are not,” said Sen. Bellows. “It’s time for fairness in how we treat retirees. Seniors are barely scraping by, and we make their lives worse when we tax those who already sacrificed so much to serve our communities in the public sector.”

Social Security income is not subject to Maine income taxes; however, any public pension income over $10,000 is. This is one portion of the inequity felt by retired state employees and teachers. These positions often pay less than similar positions in the private sector, and they are subject to the Windfall Elimination Provision/Government Pension Offset, reducing retirees’ overall retirement income.

At last year’s public hearing on the bill, the Maine Education Association, Maine Association of Retirees, Maine State Employees Association, and Maine Education Association – Retired, as well as numerous retired teachers and state workers, spoke in favor of the bill. No one testified against LD 162.

LD 162 now heads to the Maine House and Senate for initial votes.