Updated October 16, 2026. Quick answer: Maine’s pension income deduction excludes benefits earned by another person other than a surviving spouse: the 2025 booklet says “Eligible pension income does not include benefits earned by another person”, and it does not say how that applies to an IRA a non-spouse inherited.
Maine at a glance
| Item | What the documents say |
|---|---|
| How the state taxes retirement-account income | Taxed as income, with a pension income deduction that includes IRA benefits |
| Do the state’s documents address beneficiaries? | Addressed: eligible pension income does not include benefits earned by another person, except for a surviving spouse |
| Retirement exclusion or credit | Up to $48,216 per person for 2025, reduced by Social Security and railroad retirement benefits, with an income phaseout from 2025 |
| Rate in the documents read | 5.8% at the bottom bracket, then 6.75% and 7.15% in the 2025 booklet |
| State inheritance or estate tax | 36 M.R.S. 5122 refers to the Maine estate tax; see CMG’s Maine estate tax page |
| Changed for 2026? | The booklet says that for tax years beginning after 2025 the phaseout thresholds are adjusted for inflation; it notes 2025 changes: a phaseout above $125,000 of federal AGI for single filers, and exclusion of distributions from an employee retirement plan received before age 55 unless part of a series of substantially equal periodic payments |
What the Maine documents say
The 2025 booklet says you and your spouse, if married, “may each deduct up to $48,216” of eligible pension income, less Social Security and railroad retirement benefits received. The Revenue Services FAQ says “benefits received from individual retirement accounts” are included in deductible pension income.
On who may claim it, the booklet says “Eligible pension income does not include benefits earned by another person”, with the exception stated as “except in the case of a surviving spouse”. A widowed spouse receiving survivor’s benefits under an eligible pension plan may claim that amount, with the surviving spouse’s total capped at $48,216.
The booklet prints a bottom bracket of “5.8% of Maine taxable income”, then 6.75% and 7.15% above the higher thresholds. 36 M.R.S. 5122 refers to “the Maine estate tax under chapter 575 or 577”.
The federal 10-year rule and your Maine tax year
IRS Publication 590-B says a beneficiary may be required to take the entire account balance by the “end of the 10th year following the year of the owner’s death”, with exceptions for certain beneficiaries. Because the balance generally has to come out within that window, the timing of each withdrawal decides which tax year it lands in. See the 10-year rule and annual RMDs, lump sum versus spreading withdrawals and inherited IRA rules.
Withholding and other state taxes
Whether a state withholds from a withdrawal is a separate rule: see state withholding on retirement withdrawals. For Maine’s own death taxes, see Maine estate tax.
What the documents do not say
- The booklet’s wording about benefits earned by another person is framed around employer pension plans; it does not use the words inherited IRA.
- It does not say whether a non-spouse beneficiary of an IRA can claim the deduction for benefits the owner earned.
- They describe no deduction for income in respect of a decedent.
Common mistakes
- Assuming Maine’s rule for your own retirement income also covers an account you inherited: read whether its documents address beneficiaries, and confirm the point with a Maine preparer.
Related: state tax on inherited IRA withdrawals, state by state, whether Maine taxes 401(k) and IRA withdrawals, Maine retirement taxes, Maine estate tax, inherited IRA rules, spouse versus non-spouse beneficiary rules, and state withholding on retirement withdrawals.
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Answer againSources
- 2025 Maine Income Tax Resident Booklet (Form 1040ME instructions): https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/25_1040me_gen_instr_w_cover_pg.pdf
- 36 M.R.S. 5122 Modifications reducing federal adjusted gross income: https://legislature.maine.gov/statutes/36/title36sec5122.html
- Individual Income Tax FAQ: https://www.maine.gov/revenue/faq/individual-income-tax
- IRS Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs): https://www.irs.gov/pub/irs-pdf/p590b.pdf
Sources: the primary documents linked above, read on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a tax professional or the state agency itself is the right place to confirm anything consequential.