Is military retirement taxed in Maine?

How it works in Maine

Fill in the Worksheet for Pension Income Deduction that comes with Schedule 1S. Military retired pay goes on line P9 by itself, in the column of the spouse who earned it, and line P10 adds it to any non-military deduction from line P8. Carry line P10 to Schedule 1S, line 4, check the box saying line 4 includes military retirement pay, and enclose the worksheet with copies of your 1099-R forms.

Line P9 sits outside every limit on that worksheet. The non-military deduction for 2025 tops out at $48,216 per person and shrinks dollar for dollar by Social Security and Railroad Retirement benefits, whether taxable or not; the statute says that reduction does not apply to military retirement plan benefits. A phaseout of the non-military part begins once federal adjusted gross income on Form 1040ME, line 14 passes $125,000 single or $250,000 joint, and it leaves line P9 alone.

Stacking works in your favor. A single 62-year-old with an assumed $40,000 of retired pay, a $20,000 civilian pension and $18,000 of Social Security deducts all $40,000 on line P9 and the full $20,000 on line P8, because $48,216 minus $18,000 leaves $30,216 of room. The taxable part of the Social Security comes off separately on Schedule 1S, line 3. At the 7.15% rate, $40,000 of military pay is worth $2,860 a year, but only to a filer whose other income already reaches that bracket. This retiree's other income is all deducted, so for 2025 the military deduction saves about $1,151: without it, $40,000 minus the $15,000 standard deduction and $5,150 personal exemption leaves $19,850, all taxed at 5.8%.

To fix an earlier year, file that year's Form 1040ME with the AMENDED box checked. Maine Revenue Services allows a refund claim within 3 years of the original due date or 3 years of payment, whichever is later, so the 2023 through 2025 returns are still open in October 2026.

Reserve and Guard retirees qualify on the same line. The statute defines a military retirement plan as benefits received for service in the active or reserve components of the listed branches, and federal law (10 U.S.C. § 10101) counts the Army and Air National Guard of the United States among the reserve components, so non-regular retired pay earned through a drilling career goes on line P9 in full.

What trips Maine retirees up

• Through tax year 2025 the deduction covers only the Army, Navy, Air Force, Marines, Coast Guard and Space Force, so a NOAA Corps or Public Health Service retiree was limited to the capped non-military line. P.L. 2025, c. 452 (L.D. 366, An Act to Ensure Consistency of Income Tax Deductions for Retired Members of the Uniformed Services) switches the definition, for tax years beginning on or after January 1, 2026, to the uniformed services in 37 U.S.C. § 101(3), which adds NOAA and the Public Health Service. The line 6 survivor rule in ¶ HH still names only the six armed forces.
• The deduction belongs to a primary recipient, which the statute defines as the person whose earnings or contributions the benefits are based on, or that person's surviving spouse. On those words, a former spouse paid a share of retired pay under a divorce order is neither, and Maine Revenue Services has published nothing on divorce shares of military pay (read October 10, 2026).
• A surviving spouse can end up using two lines. Schedule 1S, line 6 is the form's line for military annuity payments to a survivor, while a survivor annuity from a civilian plan counts toward the non-military deduction, which the instructions cap at $48,216 for a surviving spouse. Never put the same dollars on line 4 and line 6: the instructions require line 6 to exclude anything already in the line 4 deduction. The ¶ HH text speaks of a member who died as the result of service; MRS's line 6 instructions drop the words 'who died' and state no cause-of-death test, and its line 4 instructions already count survivor benefits as exempt military retirement plan benefits.