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Legislature Reviewing Unintended Tax Increase on Veterans

AUGUSTA, Maine — An inadvertent error in last year’s state budget that could result in Maine veterans paying more than $3 million in unintended pension taxes is now under review by members of the Maine Legislature’s Taxation Committee.

Under the bill sponsored by House Republican Leader Ken Fredette of Newport, changes would be made to existing language in the budget that exempted 100 percent of military retired pay, including survivor benefits, from the state income tax beginning this year.

Speaking on behalf of the LePage administration, Michael Allen said the unintended offsets for Social Security benefits received by many veterans would have a sizable impact on many Maine households.

“Failure to pass this bill will result in a tax increase of $3 million on approximately 5,300 tax returns for the 2015 tax year,” he says.

Lawmakers on the panel were generally supportive of correcting the drafting error.

The committee is scheduled to review the bill further next week.