Sec. 17. 36 MRSA §6201, sub-§9, as amended by PL 2005, c. 457, Pt. EEE, §1 and affected by §2, is further amended to read:

9. Income. "Income" means the sum of Maine adjusted gross income determined in accordance with Part 8; contributions, including catch-up contributions, to any pension, annuity or retirement plan to the extent not included in Maine adjusted gross income, including contributions to an individual retirement account under Section 408 of the Code, a simplified employee pension plan, a salary reduction simplified employee pension plan, a savings incentive match plan for employees plan and a deferred compensation plan under Section 457 of the Code, and cash or deferred arrangements under Section 401 of the Code and qualified, or "Keogh," accounts; nontaxable contributions to a flexible spending arrangement under Section 125 of the Code; amounts excluded from gross income under Sections 125 and Section 129 of the Code; distributions from ROTH IRAs; the amount of capital gains excluded from adjusted gross income; the absolute value of the amount of trade or business loss, net operating loss carry-over, capital loss, rental loss, farm loss, partnership or S Corporation loss included in adjusted gross income; alimony; inheritance; life insurance proceeds paid on death of insured; nontaxable lawsuit rewards, such as slander, libel and pain and suffering, excluding reimbursements such as medical and legal expenses associated with the case; support money; nontaxable strike benefits; the gross amount of any pension or annuity, including railroad retirement benefits; all payments received under the federal Social Security Act and state unemployment insurance laws; veterans' disability pensions; nontaxable interest received from the Federal Government or any of its instrumentalities; interest or dividends on obligations or securities of this State and its political subdivisions and authorities; workers' compensation and the gross amount of "loss of time" insurance; and cash public assistance and relief, but not including relief granted under this chapter. "Income" does not include the first $5,000 in the of proceeds from a life insurance policy, whether paid in a lump sum or in the form of an annuity. "Income" does not include a rollover from an individual retirement account, pension or annuity fund or plan to an individual retirement account, pension or annuity fund or plan even if the amount of the rollover is includable in Maine adjusted gross income. "Income" also does not include gifts from nongovernmental sources or surplus foods or other relief in kind supplied by a governmental agency.

Sec. 18. 36 MRSA §6201-A, as enacted by PL 1989, c. 534, Pt. A, §4, is amended to read: