Does Maryland Tax Social Security and Retirement Income?

Maryland does not tax Social Security

Social Security and railroad retirement benefits are exempt from Maryland state and county income tax at every income level. Whatever portion was included in federal adjusted gross income is subtracted on Form 502, line 11. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

Benefits still matter in one place. The pension exclusion worksheet subtracts all of a person’s Social Security and railroad retirement benefits, taxable or not, from the maximum exclusion. A retiree whose benefits reach $40,600 in 2026 has no pension exclusion left. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Pensions are taxable above an exclusion that Social Security reduces

A resident who is 65 or older on the last day of the tax year, or totally disabled, or whose spouse is totally disabled, can subtract pension, annuity or endowment income from an employee retirement system. Qualifying plans include defined benefit and defined contribution pension plans and 401(a), 401(k), 403(b) and 457(b) plans. The maximum is $40,600 for calendar year 2026, down from $41,200 for 2025. (Comptroller of Maryland: Maryland Pension Exclusion (2025 and 2026 maximums))

The exclusion is the smaller of the qualifying income and the maximum less the Social Security and railroad retirement benefits received. The worksheet (13A in the Form 502 instructions) is completed separately for each spouse; when only one spouse has a pension, only that spouse’s benefits are entered. In our single example, $30,000 of Social Security leaves a $10,600 exclusion against a $20,000 pension. The result goes on line 10a, with Form 502R attached. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

Government pensions use the same exclusion as private ones. The chart in Form 502R lists plans qualified under sections 401(a) and 403, governmental 457(b) plans and the federal Thrift Savings Plan as qualifying sources. (Comptroller of Maryland, Form 502R Retirement Income (2025), with chart of qualifying plans)

Two groups get a subtraction that Social Security does not reduce. Retired correctional officers, law enforcement officers and fire, rescue and emergency services personnel who are 55 or older subtract the first $16,000 of that retirement income for 2026. Military retirees subtract up to $20,000 of military retirement income if they are at least 55 on the last day of the tax year and up to $12,500 if younger. Income subtracted either way cannot be counted again toward the pension exclusion. (Maryland Tax-General Article 10-207, Subtractions from federal adjusted gross income (military and public safety retirement income))

IRA withdrawals are fully taxable; 401(k) and 403(b) withdrawals can use the pension exclusion

Maryland law lists the accounts that are not an employee retirement system: an individual retirement account or annuity, a Roth IRA, a rollover IRA, a simplified employee pension and an ineligible deferred compensation plan. Taxable withdrawals from these accounts get no exclusion at any age. (Maryland Tax-General Article 10-209, Pension exclusion and the definition of an employee retirement system)

The Form 502 instructions add Keogh plans to that list. A distribution taken at 65 or older directly from an employer’s 401(k) or 403(b) plan qualifies, but the same money withdrawn after a rollover to an IRA does not. Our examples treat the IRA and 401(k) bucket as IRA money, so none of it is excluded; a household drawing from an employer plan would owe less. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

A Roth conversion from a traditional IRA is part of federal adjusted gross income and is taxed at the state rate plus the county rate. For the couple with the larger portfolio in our examples, a $50,000 conversion would add about $2,713 of state tax and $1,125 to $1,650 of county tax. Qualified Roth withdrawals are not in federal AGI and are not taxed. (Maryland Tax-General Article 10-105, State income tax rates)

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Investment income is taxed as ordinary income, with a 2% surtax on gains above $350,000 of AGI

Since tax year 2025, a household with federal AGI above $350,000, whatever its filing status, pays an additional 2% state tax on net capital gain included in Maryland adjusted gross income. Below that line, gains and dividends are taxed like other income. Gains on a primary residence sold for less than $1.5 million are among the exceptions; the surtax is figured on Form 502CG. (Comptroller of Maryland, Technical Bulletin No. 58: Maryland Taxation of Individual Capital Gain Income)

Interest on U.S. savings bonds and other federal obligations is subtracted from Maryland income. Interest on bonds issued by other states and their localities, exempt on the federal return, is added back on Form 502, line 2; interest on Maryland state and local bonds stays exempt. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

The state tax is 2%, 3% and 4% on the first $3,000 of taxable net income and 4.75% from there to $100,000 for single filers or $150,000 for joint filers. Rates then step up to 5.75% above $250,000 (single) or $300,000 (joint), 6.25% above $500,000 or $600,000, and 6.5% above $1 million or $1.2 million. (Maryland Tax-General Article 10-105, State income tax rates)

County income tax is mandatory: every county and Baltimore City taxes the same taxable net income as the state, on Form 502. For 2026 the rates run from 2.25% in Worcester County to 3.30% in Dorchester and Kent counties. Baltimore City and Baltimore, Howard, Montgomery and Prince George’s counties charge 3.20%; Anne Arundel (2.70% to 3.20%) and Frederick (2.25% to 3.20%) use graduated brackets. On top of the state tax in our examples, the single retiree would owe county tax of $604 at 2.25% and $886 at 3.30%; the first couple $1,532 at 2.25% and $2,247 at 3.30%; and the couple with the larger portfolio $4,727 at 2.25% and $6,933 at 3.30%. Nonresidents pay a special 2.25% rate instead. (Comptroller of Maryland, 2026 Payment Voucher Worksheet for Estimated Tax (2026 rate schedules, deduction, exemptions and local tax rates))

The Comptroller’s 2026 estimated tax worksheet uses a standard deduction of $3,350 for single filers and $6,700 for joint filers, the same as 2025. It is a flat amount that does not increase with age. (Comptroller of Maryland, 2026 Payment Voucher Worksheet for Estimated Tax (2026 rate schedules, deduction, exemptions and local tax rates))

By law the standard deduction is adjusted each year after 2025 by a federal cost-of-living measure, with any increase rounded down to a multiple of $50. The 2026 Form 502 instructions had not been published when this page was reviewed, so our examples use the amounts on the Comptroller’s 2026 estimated tax worksheet. (Maryland Tax-General Article 10-217, Standard deduction and annual cost-of-living adjustment)

Each filer and spouse receives a $3,200 exemption, which falls to $1,600, $800 and then nothing as federal AGI passes $100,000, $125,000 and $150,000 for single filers, or $150,000, $175,000 and $200,000 for joint filers. A person who is 65 or older on the last day of the tax year receives a further $1,000 exemption that is not reduced by income. (Maryland Tax-General Article 10-211, Exemptions)

Two features of Form 502 are built into our examples. A joint return on which both spouses have income subtracts up to $1,200, or the lower-income spouse’s Maryland income if that is less; pensions, IRA withdrawals and interest all count. Taxable net income under $100,000 is taxed from the tax table, which uses the midpoint of each $50 band. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

The pension exclusion described above is the largest break: up to $40,600 per person 65 or older for 2026, less the Social Security that person receives. (Comptroller of Maryland: Maryland Pension Exclusion (2025 and 2026 maximums))

The Senior Tax Credit is a nonrefundable credit against state income tax for residents who are 65 or older on the last day of the tax year. It is $1,000 for a single filer with federal AGI of $100,000 or less. On a joint return with federal AGI of $150,000 or less it is $1,750 when both spouses qualify and $1,000 when one does. There is no phase-out. The statute cuts the credit to $500 and $875, within narrower income bands, in a year when the state’s September revenue estimate falls more than 3.75% below its March estimate. (Maryland Tax-General Article 10-754, Senior Tax Credit)

That reduction does not apply for 2026. On September 24, 2026 the Board of Revenue Estimates put its fiscal year 2027 general fund forecast at $27.44 billion, $319.9 million above the prior estimate, so the full $1,000 and $1,750 amounts stand. (Maryland Board of Revenue Estimates, Revenue Estimates and Economic Outlook, September 24, 2026)

Retired forest, park and wildlife rangers who are 55 to 64 can exclude up to $15,000 of that retirement income using worksheet 13E in place of the standard pension exclusion, which starts at 65. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

A resident who is at least 100 years old on the last day of the year can subtract up to $100,000 of income. (Comptroller of Maryland, Technical Bulletin No. 51: Senior Citizens and Maryland Income Tax)

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Maryland's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which does not change with the state. The tax bracket calculator and the guide to taxes in retirement cover that side.

As a comparative measure, Tax Foundation figures drawn from Census data put Maryland property taxes at 0.92% of owner-occupied home value in 2024, 21st highest among the states. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

The Homestead Tax Credit limits how fast the taxable assessment of a principal residence can rise: 10% a year for the state property tax, and a limit of 10% or less set by each county and municipality. (Maryland Department of Assessments and Taxation: Maryland Homestead Tax Credit)

The Homeowners’ Property Tax Credit is tied to income, not age. Net worth must be under $200,000, but the home and qualified retirement savings are not counted, so a retiree whose assets sit mainly in IRAs and a house can qualify in a year when household income is $60,000 or less. (Maryland Department of Assessments and Taxation: Homeowners’ Property Tax Credit Program)

Relief aimed at older owners is local. State law lets Baltimore City, counties and municipalities grant a property tax credit on the home of anyone at least 65 years old, on terms set by local law. (Maryland Tax-Property Article 9-258, Local property tax credit for elderly individuals and veterans)

Maryland’s sales and use tax is 6% of the taxable price. Alcoholic beverages are taxed at 9%. (Maryland Tax-General Article 11-104, Sales and use tax rates)

Since July 1, 2025 a 3% rate has applied to data services, information technology services and software publishing services, a category that includes data processing, web hosting and computer systems design. (Comptroller of Maryland, Sales and Use Tax Alert: Sales and Use Tax Updates 2025 (data and information technology services))

There are no local sales taxes on top. As a comparative figure, the Tax Foundation puts Maryland’s average combined state and local rate at 6.00% as of January 2026, 38th in the country. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Food bought from a grocery store or market is generally exempt, but food for immediate consumption, soft drinks, candy and alcohol are taxed. Medicine, disposable medical supplies and health and physical aids are exempt. (Comptroller of Maryland, List of Tangible Personal Property and Services Subject to Sales and Use Tax)

Maryland has both an estate tax and an inheritance tax. The estate tax exclusion has been $5 million for deaths on or after January 1, 2019, and the tax cannot exceed 16% of the amount by which the taxable estate exceeds it. The exclusion is portable: a surviving spouse’s estate can add the unused exclusion of the spouse who died first, but for a first death on or after January 1, 2019 only if a Maryland estate tax return was filed on time and the election made on it. (Maryland Tax-General Article 7-309, Maryland estate tax exclusion, rate limit and portability)

The inheritance tax is 10% of the clear value of property passing to anyone outside an exempt group. Spouses, children, grandchildren and great-grandchildren, stepchildren, the spouses of children, parents, grandparents, siblings and registered domestic partners are exempt, as are life insurance proceeds paid to a named beneficiary and property of $1,000 or less passing to any one person. Nieces, nephews, cousins and friends pay the tax, which the Register of Wills collects. (Maryland Register of Wills: Inheritance Tax)

The two taxes are coordinated, not stacked: inheritance tax paid to the Register of Wills is subtracted from the Maryland estate tax, and only the difference is due. The estate of a nonresident who owned real or tangible personal property in Maryland is also subject to the estate tax, and the return is due nine months after death. (Comptroller of Maryland: What You Need to Know About Maryland’s Estate Tax (rev. October 2018))

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

The Budget Reconciliation and Financing Act of 2025 added the 6.25% and 6.5% brackets and the 2% capital gains surtax from tax year 2025. It also raised the standard deduction to $3,350 and $6,700, removed its income-based limit and indexed it, and required taxpayers with federal AGI over $200,000 ($100,000 if married filing separately) to reduce itemized deductions by 7.5% of the excess. (Comptroller of Maryland, Tax Alert: Changes to Standard and Itemized Deductions and to State and Local Income Tax Rates from the 2025 Legislative Session)

The same act raised the maximum county income tax rate from 3.20% to 3.30%. For 2026 Kent County rises from 3.20% to 3.30% and Allegany County from 3.03% to 3.20%. (Comptroller of Maryland, Tax Alert: Changes to Standard and Itemized Deductions and to State and Local Income Tax Rates from the 2025 Legislative Session)

The public safety retirement subtraction rises from $15,000 in 2025 to $16,000 for 2026 and by $1,000 a year after that, reaching $20,000 from 2030. (Maryland Tax-General Article 10-207, Subtractions from federal adjusted gross income (military and public safety retirement income))

The Comptroller’s 2026 employer withholding guide applies a standard deduction of $3,400 in its percentage method, $50 more than the $3,350 on its 2026 estimated tax worksheet. The amounts for 2026 returns will appear in the 2026 Form 502 instructions. (Comptroller of Maryland, Maryland Employer Withholding Guide (2026))

A person is a Maryland resident for income tax if they are domiciled in the state on the last day of the tax year, or if they maintained a place of abode in Maryland for more than six months of the year, wherever they are domiciled. (Maryland Tax-General Article 10-101, Definitions (resident))

The Form 502 instructions add a day count: a person whose permanent home is elsewhere but who kept a place to live in Maryland for more than six months and was physically present for 183 days or more files as a full-year resident. A person who moves in or out during the year files Form 502 as a part-year resident and subtracts income received while a nonresident on line 12. The standard deduction and exemptions are prorated by the share of income subject to Maryland tax, and the pension exclusion by months of residence. (Comptroller of Maryland, Resident Income Tax Return Instructions for Form 502 (2025))

Under federal law (4 U.S.C. 114) a state cannot tax the retirement income of a person who is not its resident or domiciliary. A Maryland state pension or a 401(k) built during a Maryland career is taxed only by the state where the retiree lives when it is paid. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)