Does Maryland Tax Retirement Income?

No. Maryland does not tax Social Security benefits.

Social Security and Railroad Retirement benefits are subtracted from Maryland income. The benefits still matter because the full amount received, taxable or not, reduces the pension exclusion.

The Maryland answer is separate from the federal one. Depending on combined income, up to 85% of Social Security benefits can be taxable on the federal return regardless of what Maryland does, so the state rule changes the state line only. Our guide to states that do not tax Social Security shows where Maryland sits among the states that still tax benefits.

Partly. Maryland taxes some pension income, subject to an exclusion or age rule.

Pension and annuity income from an employee retirement system qualified under Section 401(a), 403, or 457(b) can qualify for the pension exclusion at age 65 or older or if totally disabled. The 2026 maximum is $40,600 before the Social Security reduction. Public safety retirees get a separate subtraction of up to $15,000.

For 2026 the maximum pension exclusion is $40,600, down from $41,200 in 2025 because the cap tracks the maximum Social Security benefit. The exclusion equals the smaller of qualifying pension income or $40,600, minus every dollar of Social Security and Railroad Retirement received during the year. A resident age 65 or older can also claim a nonrefundable senior tax credit of $1,000 (single, federal AGI up to $100,000) or $1,750 (joint, federal AGI up to $150,000).

Public and private pensions, annuities, and retirement-plan distributions do not always get the same treatment. The pension comparison lists which states exempt pensions broadly, partly, or only for certain plans.

Partly. Maryland taxes some traditional 401(k) and IRA withdrawals, subject to an exclusion or age rule.

401(k), 403(b), and 457(b) distributions count as employee-retirement-system income and can use the pension exclusion. Traditional IRA, SEP, and Keogh distributions are fully taxable at any age. A rollover IRA qualifies only when every dollar in it came from an employer plan rollover.

Two timing points matter in Maryland. A Roth conversion is taxable in the year it is done, and Maryland starts from federal adjusted gross income, so a large conversion can land in a year when the state exclusion does not cover it. Qualified Roth withdrawals later are generally not taxable at either level. Required minimum distributions follow the same Maryland rules as any other traditional-account withdrawal.

Every state page on this site runs the same retiree profile so the states can be compared: $30,000 of Social Security, $40,000 withdrawn from a traditional 401(k), and a $20,000 private pension, $90,000 in total.

A single 68-year-old with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension subtracts the Social Security and has $60,000 of qualifying employee-plan income. Because the $40,600 cap is reduced by the full $30,000 of Social Security received, the pension exclusion is only $10,600, leaving about $49,400 of retirement income in Maryland taxable income before deductions.

Start with federal AGI of about $85,500, subtract the $25,500 of taxable Social Security, then subtract the $10,600 pension exclusion, which leaves roughly $49,400. After the standard deduction (about $3,350) and personal exemptions (about $4,200 including the age-65 exemption), Maryland taxable income is roughly $41,900 and the state tax is roughly $1,900 at the 4.75% bracket. The $1,000 senior credit cuts that to roughly $900, but the county piggyback tax of 2.25% to 3.30% adds roughly $950 to $1,400 on top. Contrast: a $150,000 traditional IRA withdrawal in the same year gets no pension exclusion at all, pushes the state bill to roughly $9,500 in the 5.5% bracket, adds roughly $6,000 of local tax at a 3.2% county rate, and eliminates the senior credit because federal AGI exceeds $100,000.

The same $90,000 profile looks different a state line away. The rows below come from the reviewed 51-state table; each state name links to its own guide.

• Delaware: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 6.60% and up to $12,500 pension exclusion at age 60+.
• Virginia: treats Social Security as exempt, pensions as partially taxed, and 401(k) and IRA withdrawals as partially taxed, with a top rate of 5.75% and age deduction and $40,000 military subtraction.
• Pennsylvania: treats Social Security as exempt, pensions as exempt, and 401(k) and IRA withdrawals as exempt, with a top rate of 3.07% and eligible retirement distributions are exempt.

People read the $40,600 headline and assume it shelters their pension. The Social Security reduction usually cuts it in half or worse, and a traditional IRA gets nothing. The retiree who rolled a 401(k) into an IRA that also holds other contributions gave up the exclusion on that account.

Military retirement: Military retirees and their spouses or ex-spouses may subtract up to $20,000 of military retirement income at age 55 or older, or up to $12,500 if younger than 55. The subtraction is separate from the pension exclusion. See the military retirement tax map for every state's treatment.

Estate and inheritance tax: Maryland has both an estate tax, with a $5 million exemption, and a 10% inheritance tax. Spouses, children, grandchildren, parents, and other lineal relatives are exempt from the inheritance tax; nieces, nephews, friends, and unmarried partners are not.

Selling a home or investments in Maryland: retirement-income rules do not cover capital gains. See Maryland capital gains tax before selling appreciated property or a brokerage position in the year you move or retire.

• Confirm the exclusion you are claiming. For 2026 the maximum pension exclusion is $40,600, down from $41,200 in 2025 because the cap tracks the maximum Social Security benefit. The exclusion equals the smaller of qualifying pension income or $40,600, minus every dollar of Social Security and Railroad Retirement received during the year. A resident age 65 or older can also claim a nonrefundable senior tax credit of $1,000 (single, federal AGI up to $100,000) or $1,750 (joint, federal AGI up to $150,000).
• Part-year residents. If you moved into or out of Maryland during the year, retirement income is generally allocated to the period of residency, and the former state may still tax distributions received before the move. Document the move date, the new domicile, and where each distribution was received.
• Withholding and estimates. Pension and IRA custodians often withhold federal tax but not Maryland tax. If Maryland taxes any part of your retirement income, check whether quarterly estimated payments are needed to avoid an underpayment penalty.
• Federal side. The federal return has its own rules: up to 85% of Social Security can be taxable, the temporary $6,000 federal senior deduction is available for 2025 through 2028 subject to income limits, and Roth conversions are taxed in the conversion year. State exemptions do not change any of that.
• Large one-time distributions. If you are still working, think twice before consolidating employer plans into an IRA that already holds personal contributions. Keeping a clean rollover IRA, or leaving money in the 401(k), preserves Maryland pension exclusion eligibility on those withdrawals after age 65.

Comparing states before a move? Use the retirement taxes by state table and the moving states tax guide, and read retirement tax planning for how distributions, conversions, and a move are sequenced together.