Retirement - Maine vs. New Hampshire Taxes (Portland, Bangor: low income, vehicle registration)

[Nanaroro]

My husband is retiring this June, and will receive a MTRS (state pension). I was under the impression that all state pensions are taxed in Maine. I will start receiving a small State pension, as I had to stop working early due to health. Since the State of MA does not allow a person to collect both State and Social Security pensions (even if you have paid into both) you must choose which retirement to collect from. If State pension is low enough (as mine is) SS disability will adjust (lower by hundreds$$) the payment you are receiving to an average.. but does not stop. Yet Maine still wants to take income tax from that?! I know Maine Governor is trying to lower the income tax...hope that is approved.

[bangorme]

Originally Posted by Nanaroro

My husband is retiring this June, and will receive a MTRS (state pension). I was under the impression that all state pensions are taxed in Maine. I will start receiving a small State pension, as I had to stop working early due to health. Since the State of MA does not allow a person to collect both State and Social Security pensions (even if you have paid into both) you must choose which retirement to collect from. If State pension is low enough (as mine is) SS disability will adjust (lower by hundreds$$) the payment you are receiving to an average.. but does not stop. Yet Maine still wants to take income tax from that?! I know Maine Governor is trying to lower the income tax...hope that is approved.

In Maine, pensions are taxable. I believe there is a $6,000 exemption on some of them. People are retiring and leaving the state in droves and heading to tax-friendlier states... sounds like the businesses doesn't it???

[slyfox2]

There is a plan by the governor to eliminate the tax on pensions, but it will cost the state about 90 million dollars. They don't know where to come up with this money. I would suggest a reduction in the tax to just 3% which would eliminate a lot of the money lost. But I'm a newbie to Maine so I have no input with the statehouse.

[bangorme]

Originally Posted by slyfox2

There is a plan by the governor to eliminate the tax on pensions, but it will cost the state about 90 million dollars. They don't know where to come up with this money. I would suggest a reduction in the tax to just 3% which would eliminate a lot of the money lost. But I'm a newbie to Maine so I have no input with the statehouse.

Maine could do like the other states that exempt pension income... collect a ton of sales and property taxes. Many many retirees would come to Maine if the Governor's plan was enacted, just like they are heading to Florida and Texas now. People might even be able to sell their homes here.

[Submariner]

Originally Posted by bangorme

In Maine, pensions are taxable. I believe there is a $6,000 exemption on some of them. ...

A married couple in Maine has a Standard Deduction of $8,600 and an exemption of $5,700, so the first $14,300 of their income is tax-free.

If they also get a $6,000 exemption on their pension, that means that the first $20,300 of their income is tax-free.

... People are retiring and leaving the state in droves and heading to tax-friendlier states... sounds like the businesses doesn't it???

And yet I see retirees coming to Maine to take advantage of the tax situation here.

Perception has a lot of do with this.

[slyfox2]

Originally Posted by forest beekeeper

And yet I see retirees coming to Maine to take advantage of the tax situation here.

Perception has a lot of do with this.

Yes I retired here. But it had nothing to do with the tax situation. If I'd stayed where I was, I would have pain NO STATE or LOCAL Tax. I moved because the environment was immensely better--- both the people and the place. I would be happy to have the tax burden removed, but I am fully aware of the plight a very small population state has in providing services with little income.

[Submariner]

Originally Posted by slyfox2

Yes I retired here. But it had nothing to do with the tax situation. If I'd stayed where I was, I would have pain NO STATE or LOCAL Tax. I moved because the environment was immensely better--- both the people and the place. I would be happy to have the tax burden removed, but I am fully aware of the plight a very small population state has in providing services with little income.

In the previous two homes that we had lived in [stateside], we had considered retiring to. But the taxes and COL were so horribly high, that we had came to the decision that anywhere we did decide to retire to, it could not be either of those two states. My home state [California] is just as bad.

I see other retirees on these forums who move to Maine.

At my VFW I know two other retirees closely who came here after they retired from NJ.

I understand that these are specific cases and not representative of statewide. A lot of this is about how we each perceive where retirees go.

Do more retirees leave Maine as compared to how many move to Maine? I have no idea.

I know that I personally do not pay income taxes on my pension in Maine; my vehicle taxes and fees went down by moving to Maine; my property taxes are much lower as compared to other homes I have owned [and I am able to afford to own a much larger home].

Is that how things work for everyone? I have no idea.

In my case, what I see from my perspective, it surely seems obvious. But clearly what others see from their perspectives is different.

[GraniteStater]

New Hampshire also has many lower cost areas with low property taxes in the eastern Lakes Region right by the Maine border.

[bangorme]

Originally Posted by forest beekeeper

A married couple in Maine has a Standard Deduction of $8,600 and an exemption of $5,700, so the first $14,300 of their income is tax-free.

If they also get a $6,000 exemption on their pension, that means that the first $20,300 of their income is tax-free.





And yet I see retirees coming to Maine to take advantage of the tax situation here.

Perception has a lot of do with this.

No, it's called the distinction between fact and anecdotal evidence. Here's the facts:
State-by-State Guide to Taxes on Retirees

[michael_atw]

Food for thought:

The cost of one smartphone for a year is more than the savings a middle-class person gets for living in NH with no sales or income tax in that same year. As a NY'er before I moved to Maine, if I would have moved to NH I would have saved roughly $1500 last year on $32k income in sales and income tax. I have omitted though the purchase of a vehicle, but that was a one-off-per-10-year thing. The cost of a smartphone is $1800-$2000 a year.

People make a big deal about taxes when they never used to. Taxes were not mulled over - opportunity, quality of life value, livability, proximity to services, etc. were the important things. And for most, they make a big deal about taxes but it doesn't change their experience or location. Complaining about low taxes are first world issues.