TaxtirementState guides · MD
How Maryland taxes retirement income
- Maryland doesn't tax Social Security benefits.
- Exclusions and subtractions for retirement income (details below):
- Pension exclusion: from age 65, at most $40,600 per person.
- Social Security / Railroad Retirement subtraction.
- Public safety retirement income subtraction: from age 55, at most $16,000 per person.
- Military retirement income subtraction: at most $20,000 per person.
- Rates for 2026: 2% to 6.5%, graduated.
At a glance
| Income tax | Yes |
|---|---|
| Rates (2026) | 2% to 6.5%, graduated |
| Starts from | Federal adjusted gross income (AGI) |
| Standard deduction | $3,400 single, $6,850 married filing jointly |
| Personal exemption | $3,200 per person |
| Age 65 and older | $1,000 extra exemption per person |
| Social Security | Not taxed |
| Retirement income exclusions | 4 (see below) |
| Roth conversions | Taxable |
| Capital gains | Special treatment (see below) |
| Local income tax | Yes, in some places (see below) |
Tax rates
Brackets apply to Maryland taxable income. Other filing statuses are in the rules reference.
| Rate | Single: taxable income | Married filing jointly: taxable income |
|---|---|---|
| 2% | $0 to $1,000 | $0 to $1,000 |
| 3% | $1,000 to $2,000 | $1,000 to $2,000 |
| 4% | $2,000 to $3,000 | $2,000 to $3,000 |
| 4.75% | $3,000 to $100,000 | $3,000 to $150,000 |
| 5% | $100,000 to $125,000 | $150,000 to $175,000 |
| 5.25% | $125,000 to $150,000 | $175,000 to $225,000 |
| 5.5% | $150,000 to $250,000 | $225,000 to $300,000 |
| 5.75% | $250,000 to $500,000 | $300,000 to $600,000 |
| 6.25% | $500,000 to $1,000,000 | $600,000 to $1,200,000 |
| 6.5% | $1,000,000 and up | $1,200,000 and up |
Social Security
Maryland doesn't tax Social Security benefits.
Pensions, IRAs and 401(k)s
Pension exclusion (Form 502 line 10a, Worksheet 13A)
Per qualifying person (age 65+ on Dec 31, or totally disabled / spouse totally disabled): exclusion = min(taxable pension from an employer 'employee retirement system' qualified under IRC 401(a), 403 or 457(b), max(0, $40,600 for 2026 [$41,200 for 2025] minus that person's TOTAL Social Security + Railroad Retirement benefits received, taxable or not)). Traditional IRAs, Roth IRAs, rollover IRAs, SEPs, Keogh plans, ineligible 457(f) plans and foreign retirement income do NOT qualify. Computed separately per spouse; on a joint return where only one spouse has a pension, only that spouse's Social Security offsets. Max is indexed to the maximum annual Social Security benefit.
Social Security / Railroad Retirement subtraction (line 11)
The full amount of Social Security and Tier I/II railroad retirement benefits included in federal AGI is subtracted.
Public safety retirement income subtraction (Form 502SU code v)
TY2026: up to $16,000 (TY2025 $15,000) of employee-retirement-system pension attributable to service as a correctional officer, law enforcement officer, or fire/rescue/EMS personnel of the U.S., Maryland or a Maryland political subdivision, age 55+ on Dec 31. Can be claimed in addition to the pension exclusion (amount subtracted here is excluded from worksheet 13A line 1). Ch. 686 of 2026 (SB 607, approved May 26 2026, effective July 1 2026; TG 10-207(mm)) sets $16,000 (2026), $17,000 (2027), $18,000 (2028), $19,000 (2029), $20,000 (2030+), not indexed .
Military retirement income subtraction (code u)
Up to $20,000 if age 55+ on Dec 31 ($12,500 if under 55). Noted for completeness.
Roth conversions
A Roth conversion counts as taxable income for Maryland. Whether a retirement income exclusion can cover part of it depends on the rules above.
Capital gains
Ordinary rates, PLUS an additional 2% tax (Form 502CG, Ch. 604 of 2025, TY2025+) on net capital gain income when federal AGI exceeds $350,000 (all filing statuses; cliff test on AGI, the 2% applies to the whole qualifying net gain, not just the excess). Excluded from the 2% base: gain on sale of primary residence (only if the sale totals less than $1,500,000), gains on assets held inside tax-advantaged retirement plans (401k/403b/457b/IRA/Roth IRA/DB/DC), certain livestock, conserved land, IRC 179 business property and nonprofit affordable housing. The 2% is state tax only (no local piggyback).
Credits and relief for older residents
- Senior Tax Credit (Form 502 line 24 / 502CR code m). Nonrefundable. Age 65+ resident: $1,000 if federal AGI does not exceed $100,000 (single/MFS). Joint, head of household or qualifying surviving spouse with federal AGI not over $150,000: $1,750 if both spouses 65+, $1,000 if only one spouse 65+. Cliff (no phase-out). Credit value can be reduced in a year the September revenue estimate falls >3.75% below March estimate.
- Two-income married couple subtraction. Up to $1,200 when both spouses have Maryland-taxable income on a joint return (smaller spouse's income, capped at $1,200).
- Itemized deduction limitation (not a credit, but affects retirees who itemize). TY2025+: itemized deductions reduced by 7.5% of federal AGI over $200,000 ($100,000 MFS). May itemize on Maryland only if itemized federally; state/local income taxes must be removed from the federal Schedule A amount.
Local income taxes
All 23 counties and Baltimore City levy a local income tax on Maryland taxable net income, collected on Form 502 line 28; 2026 rates range 2.25%-3.30% (Anne Arundel and Frederick use graduated local brackets). Researched separately in MD-counties.json.
More detail from our research notes
Tax is figured from the tax table if taxable income < $100,000 (table rows are $50 wide and use the midpoint), otherwise from Schedule I (single, MFS, dependent) or Schedule II (joint, HOH, QSS). State brackets are NOT indexed. Personal exemption is $3,200 per taxpayer/spouse/dependent, phased by federal AGI: single/MFS $3,200 up to $100,000, $1,600 over $100,000-$125,000, $800 over $125,000-$150,000, $0 over $150,000; joint/HOH/QSS $3,200 up to $150,000, $1,600 over $150,000-$175,000, $800 over $175,000-$200,000, $0 over $200,000. The additional $1,000 exemption for age 65+ (on the last day of the tax year) or blindness is per person and is NOT phased out. The standard deduction is a flat amount (the old 15%-of-income formula was repealed by the 2025 BRFA): $3,350 / $6,700 for 2025, increased for tax years after 2025 by the IRC 1(f)(3) C-CPI-U cost-of-living adjustment with 2024 as the base year, increase rounded down to $50 (TG 10-217(c)). 2026: $3,400 single/MFS (published, Comptroller 2026 withholding percentage-method tables) and $6,850 joint/HOH (derived: C-CPI-U Sep 2024-Aug 2025 average / Sep 2023-Aug 2024 average = 1.02422; 6,700 x 0.02422 = 162 -> +150). Age tests are measured on Dec 31 of the tax year. Retirees whose income is mostly traditional-IRA withdrawals or Roth conversions get no pension exclusion (IRA rollovers from a 401(k) lose eligibility); Social Security is fully exempt regardless. HB 707 (2026, full exclusion incl. IRAs) and HB 411 (2026, $4,100/$8,200 standard deduction) did NOT pass. 2027+: no enacted rate, bracket, surtax or exclusion change found other than the public-safety subtraction steps (BRFA of 2026 has no individual income tax changes affecting retirees; TG 10-105 current text has no sunset on the 2% capital gain tax).
Pending confirmation
These points were still being confirmed against Maryland's published 2026 forms when this page was built. Most are waiting on forms the state publishes around the turn of the year.
6 items
- 2026 joint/HOH standard deduction $6,850 is DERIVED (TG 10-217(c)); only the single $3,400 is published (withholding tables). Confirm on the 2026 Form 502 resident booklet (Jan 2027): https://www.marylandcomptroller.gov/individuals/tax-forms.html
- Senior Tax Credit: confirm no 2026 reduction triggered by the September 2026 Board of Revenue Estimates revision.
- 2026 pension exclusion max $40,600 confirmed on Comptroller KB0010012 and in the Comptroller's Tax Guidance of 04/08/2026 ('maximum pension exclusion of $41,200 for calendar year 2025 and $40,600 for calendar year 2026', as reported by Bloomberg Tax 04/09/2026). Rechecked 2026-10-02 after a question about the decrease: Tax-General 10-209(b)(2)/(c) (mgaleg.maryland.gov, current text) does not index the amount by a price index; it says the Comptroller 'shall determine the maximum annual benefit under the Social Security Act allowed for an individual who retired at age 65 for the prior calendar year' and may round to the nearest $100. That age-65 benefit can fall year to year (the early-retirement reduction at 65 grows as the full retirement age rises to 67 for people born in 1960), so a decrease is consistent with the statute; the Comptroller's determination is the operative figure. Not independently re-derived from SSA tables (ssa.gov refused automated fetches). 2026 HB 707 (would have replaced the cap with a % of income) got only a committee hearing. The 2026 Form 502 worksheet itself is not yet published.
- Brackets for 2026 identical to 2025 (not indexed): TG 10-105 current text unchanged by the 2026 session.
- Form 502 line 17b when the federal SALT cap binds: modeled as min(Sch A 5a, 5e) per the Comptroller FAQ cap statement (no proration worksheet published).
- 2027 standard deduction (TG 10-217(c)) cannot yet be derived cleanly: BLS published no October 2025 C-CPI-U , so the Sep 2025-Aug 2026 average depends on how the IRS/Comptroller treat the gap. Taxtirement indexes the 2026 amounts.
Sources
Every figure comes from these documents, mostly the state's own forms, instructions and statutes.
- 2025 Resident Booklet: rate schedules I & II, tax table, standard deduction, exemption chart 10A, age-65 exemption, pension exclusion worksheet 13A (IRAs excluded), SS subtraction, public safety/military subtractions, senior tax credit, itemized phase-out…; Itemized deductions (group-d, 2026-10-02): 2025 resident booklet Instruction 14 p.13 (17a federal Sch A line 17, 17b income taxes used federally), FAQ 3 p.7 (17b capped at the federal SALT cap), Worksheet 14A p.12 (7.5% over $200,000 / $100,000 MFS),…https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/instructions/2025/resident-booklet.pdf
- Form 502CG 2025 (2% additional tax on net capital gain income, $350,000 FAGI test, exclusions)https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/forms/2025/502cg.pdf
- Pension exclusion max $41,200 (2025) and $40,600 (2026); eligible/ineligible planshttps://services.marylandcomptroller.gov/taxes?id=kb_article_view&sysparm_article=KB0010012
- Tax-General 10-209(b)-(c): pension exclusion = lesser of employee-retirement-system income and the Comptroller-determined maximum annual Social Security benefit for an individual who retired at age 65 for the prior calendar year (nearest $100), less Social…https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg§ion=10-209&enactments=false
- 2025 rate brackets and 2026 local rateshttps://services.marylandcomptroller.gov/taxes?id=kb_article_view&sysparm_article=KB0010014
- HB 411 (2026) fiscal note: standard deduction COLA after 2025, 2026 amount not yet announced; bill not enactedhttps://mgaleg.maryland.gov/2026RS/fnotes/bil_0001/hb0411.pdf
- HB 707 (2026) fiscal note: current-law pension exclusion (indexed to max SS benefit, SS offset, IRAs excluded), Senior Tax Credit amounts; bill not enactedhttps://mgaleg.maryland.gov/2026RS/fnotes/bil_0007/hb0707.pdf
- SB 607 (2026) Chapter 686: public safety retirement subtraction increasehttps://mgaleg.maryland.gov/mgawebsite/Legislation/Details/sb0607?ys=2026RS
- 2026 withholding percentage-method tables (PM320 etc.): 'The standard Deduction is $3,400'https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/instructions/withholding/2026/pm320.pdf
- TG 10-217 (standard deduction $3,350/$6,700, COLA after 2025, round down to $50)https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg§ion=10-217&enactments=false
- Ch. 686 of 2026 (SB 607): public safety subtraction $16k-$20k 2026-2030https://mgaleg.maryland.gov/2026RS/Chapters_noln/CH_686_sb0607t.pdf
- BRFA of 2026 DLS summary: no individual income tax changes for retireeshttps://mgaleg.maryland.gov/Pubs/BudgetFiscal/BRFA_of_2026_Budget_Summary_Provisions_Recommendations.pdf
Taxtirement's Maryland calculation is also checked against a second, independent implementation on 1,000 random households. How we check our numbers.
See your own years. Taxtirement applies these Maryland rules, and the federal and Medicare rules, to your household for every year of retirement, and shows the calculation behind each number. Coming November 2026 for iPhone, iPad and Mac.
This page summarizes Maryland's 2026 rules as Taxtirement applies them, for education and planning. It isn't tax advice, and it doesn't cover every situation (for example part-year residents, businesses or military-only provisions). Rules change; check the state's current instructions, or a tax professional, before you act. Spotted something wrong? Tell us.