Updated October 4, 2026. Quick answer: Yes, with a pension deduction. Maine taxes 401(k) and IRA withdrawals, but the 2025 booklet lets taxpayers “each deduct up to $48,216 of other eligible pension income”. It is reduced by Social Security and railroad retirement benefits and phased out at higher income.
More state retirement-income schedules, line by line: Maine Schedule 1S.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Maine tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Maine tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Maine tax withholding on IRA and 401(k) withdrawals.
What Maine does with 401(k) and IRA withdrawals
The booklet lists “401(k) (qualified cash or deferred arrangements)” and “Roth IRA accounts under IRC section 408A” among eligible sources. It also says: “The $48,216 cap must be reduced by any social security and railroad” benefits received. Distributions are excluded if “received prior to age 55 that are not part of a series” of equal payments, and a taxpayer who “converts a traditional IRA to a Roth IRA” does not get the deduction on the conversion.
| Item | What the documents say |
|---|---|
| Treatment | Taxable, with a pension income deduction |
| Deduction | Up to $48,216 per taxpayer for 2025, reduced by Social Security and railroad retirement benefits |
| Phase-out | Federal AGI above $125,000 (single), $187,500 (head of household) or $250,000 (joint) |
| Eligible accounts | 401(k), traditional IRA and Roth IRA accounts; not conversions or distributions before age 55 outside a series of equal payments |
| State rates | 5.8% to a 7.15% top rate (2025) |
| Source | Maine Revenue Services, 2025 1040ME booklet and FAQ; 36 M.R.S. 5122 |
A $40,000 withdrawal
For a filer with no Social Security and income under the phase-out, a $40,000 withdrawal is below the $48,216 cap, so it can be fully deducted. With $20,000 of Social Security, the cap falls to $28,216 (computed as $48,216 minus $20,000), and $11,784 of the withdrawal stays in Maine income.
What changes in 2026
The booklet says the phase-out threshold amounts are adjusted for inflation for tax years after 2025. No 2026 dollar cap or rate schedule is printed in the documents read.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Maine taxes pensions, how Maine taxes retirement income, whether Maine taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- 2025 Maine Income Tax Resident Booklet (Form 1040ME general instructions with cover page), Tax Year 2025: https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/25_1040me_gen_instr_w_cover_pg.pdf
- Individual Income Tax FAQ (pension income deduction questions 14 and 15): https://www.maine.gov/revenue/faq/individual-income-tax
- 36 M.R.S. 5122 Modifications reducing federal adjusted gross income (paragraphs M-2 and M-3): https://legislature.maine.gov/statutes/36/title36sec5122.html
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.