PORTLAND, Maine — The deadline to file your taxes is next Wednesday. As the clock is ticking, some in Maine are paying taxes on their income not once, but twice, and they may not even know it.
State Rep. Beth Turner, R-Burlington, says the income tax rules in Maine just don’t add up, and here’s why. If you worked in another state, and retired to Maine, you could be paying taxes on your income twice.
Retired teacher Paul Reinbold spent 25 years of his career teaching in Massachusetts schools before he and his wife moved to Maine 10 years ago.
“They were taxed while they were working on those contributions; they’re being taxed again in the new state in retirement when they receive it as a pension. It’s an inequity in the system,” said Michael Allen, deputy finance commissioner.
For years, Massachusetts Retirees United has been pushing Maine to fix the system, saying about 800 Massachusetts teachers who retired to Maine are being unfairly taxed. And now that fix might just happen.
Turner’s bill says pension income that’s already been taxed in another state would be tax free in Maine.
“So they would not be taxed again on the same money they’ve already paid,” Turner said.
Another possible solution comes as part of Gov. Paul LePage’s tax reform plan. His proposal says already taxed pension income up to $35,000 would not be taxed again.
“This would certainly shield much more of that from being double taxed and many cases eliminate that double tax altogether,” Allen said.
Maine state retirees moving to many other states, including Massachusetts, are in the same situation. They are taxed twice on the same pension income.
Experts say if Turner’s bill passes, Maine pensions would be tax-exempt in Massachusetts because that state offers reciprocity.
Turner says she hasn’t heard any opposition to her bill. Democrats and Republicans are both co-sponsoring it.