Updated October 5, 2026. Quick answer: Yes, with a deduction. Maine Revenue Services’ FAQ says each spouse may deduct up to $48,216 of pension income for 2025, reduced by Social Security and phased out at high incomes. The rates are 5.8%, 6.75% and 7.15%.
More state retirement-income schedules, line by line: Maine Schedule 1S.
How Maine treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed on a graduated schedule; a pension income deduction applies |
| 2025 rates | 5.8% below $26,800 for a single filer, 6.75% to $63,450, 7.15% above (joint: $53,600 and $126,900) |
| The deduction | Up to $48,216 per spouse, reduced by all taxable and nontaxable Social Security and Railroad Retirement benefits |
| What counts | Employer plans under IRC 401(a) and 401(k), IRAs, 457(b) plans and “employee annuities” under IRC 403 |
| Phase-out | From 2025 the deduction phases out above $125,000 of federal adjusted gross income single, $187,500 head of household or $250,000 joint |
| Purchased annuities | The documents read do not list a commercial annuity bought outside a retirement plan |
A $24,000 example
A single filer with $24,000 a year from an IRA or 403(b) annuity and no Social Security is under the $48,216 cap and the phase-out, so the deduction covers all of it and it adds $0.
A commercial annuity paying $24,000 is not listed, so if it is the only income the 5.8% rate applies, which is $1,392, computed as $24,000 x 5.8% (the amount is under the $26,800 line).
What changes in 2026
For tax years beginning after 2025 the phase-out thresholds are adjusted for inflation; the 2025 instructions print no new 2026 dollar figures.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether Maine taxes pensions, how Maine taxes retirement income, state tax on 401(k) and IRA withdrawals, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- 2025 Maine Individual Income Tax Booklet (Form 1040ME General Instructions) (Maine Revenue Services): https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/25_1040me_gen_instr_w_cover_pg.pdf
- Individual Income Tax FAQ (Maine Revenue Services): https://www.maine.gov/revenue/faq/individual-income-tax
- State of Maine Individual Income Tax 2025 Rates (Maine Revenue Services): https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/ind_tax_rate_sched_2025.pdf
Sources: the primary documents linked above, read on October 5, 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.