Legislative Council Votes Threaten Military Pension Benefit

Rep. Fredette’s bill would fix an inadvertent error in the budget that could cost Maine veterans a $10,000 benefit

Augusta – House Republican Leader Ken Fredette of Newport has submitted a bill request that would fix an inadvertent error in the recently passed biennial budget regarding the exemption of military pensions from the income tax. The bill request, LR 2434 An Act To Make Additional Technical Changes to Recently Enacted Tax Legislation Concerning Pension Income, failed on a 5-5.

The current language in the budget, as written, would require taxpayers with military pensions to offset their $10,000 pension deduction by social security benefits received during the taxable year. For years this has not been the case and the social security offset has not been required for military pay. This mandated offset was not the intent of the budget, rather an inadvertent change that was not caught until after the budget was enacted. If this is not corrected, it could cause veterans to lose a crucial benefit, possibly the entire $10,000 pension deduction benefit that they have rightfully been entitled to for more than a decade.

“My hope is that the votes cast against this proposal to implement a simple fix were simply an oversight by some members on the Legislative Council and I hope they will all vote to allow this bill to move forward upon appeal,” said Rep. Fredette. “Veterans in Maine are counting this, and I think we can all agree that taking care of our veterans is a priority for those of us in the Maine Legislature.”

Maine taxpayers will begin to file their state tax returns at the end of January and if this is not corrected immediately our veterans will lose this benefit.

“The budget passed in June exempted 100 percent of military retired pay, including survivor benefits, from the income tax starting in 2016,” continued Rep. Fredette. “While this remains unchanged, we need to honor our word and commitment to our veterans by restoring a benefit that was never intended to be changed. Time is of the essence here and I hope the members of the Legislative Council will do the right thing on this bill.”

The Legislative Council will hear the appeal on November 19.

Below is the language for the bill proposal as well as the recorded vote from the Legislative Council:

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