TL;DR:
Does Maryland tax retirement income? The simple answer is yes. Maryland taxes many traditional retirement account withdrawals and pension income in addition to federal tax, while fully exempting Social Security benefits.
The total taxes for retirees in Maryland, however, depend on income level, filing status, county of residence, and eligibility for exclusions like Maryland’s pension subtraction (up to $41,200 in 2025). Roth withdrawals are generally not taxed again if qualified.
Understanding Maryland retirement taxes can help retirees structure withdrawals strategically and reduce unnecessary tax exposure. Here’s a brief overview of what to know:
- Social Security benefits are not taxed by Maryland.
- Traditional 401(k), 403(b), and IRA withdrawals are taxed at both federal and state levels.
- Eligible retirees 65+ may qualify for a pension exclusion up to $41,200 (2025).
- Maryland state income tax ranges from 2% to 6.50%, plus county income tax.
- Qualified Roth IRA and Roth 401(k) withdrawals are generally tax-free at the state level.
Retirement can be a wonderful time in your life, especially if you’ve worked hard for many years and planned for it wisely. But for even the best-prepared individuals, life sometimes happens. For instance, maybe you find yourself recently transplanted to Maryland for one reason or another.
The unfortunate reality is that state taxes can sometimes unexpectedly reduce retirement income. Specifically, taxes in Maryland for retirees can add up more quickly than expected.
Exactly how much you get taxed as a retiree in Maryland depends on your income sources, your age, and your residency status. Maryland does tax many forms of retirement income in addition to federal taxes, but it also offers specific exclusions and credits designed for seniors.
Here’s what you need to know.
Does Maryland Tax Retirement Income in Addition to Federal Tax?
Yes. For Maryland residents, most pre-tax retirement withdrawals are taxed by the IRS as well as the State of Maryland.
Distributions from the following are included in your federal adjusted gross income (AGI). Maryland begins its calculation using that same federal AGI.
- Traditional 401(k)s
- 401(a), 403(b), and 457(b) plans
- Traditional IRAs
- Thrift Savings Plans
For tax year 2025, Maryland’s graduated income tax rates range from 2.00% to 6.50%, depending on income. In addition, counties impose local income taxes ranging from 2.25% to 3.30%.
Practically speaking, that means, as a retiree in Maryland, you could face:
- Federal income tax
- Maryland state income tax
- Maryland local (county) income tax
Official rate details and senior filing requirements are available through the Maryland Comptroller’s office.
How Much Tax Does Maryland Tax on Retirement Income?
The answer to that question depends on a wide range of things, including but not limited to:
- Total taxable income
- Filing status
- County of residence
- Eligibility for subtractions and credits
Potential Exemptions, Exclusions, & Credits
Social Security
Maryland does not tax Social Security benefits, even if a portion is taxable federally.
Pension Exclusion (2025 Update)
Maryland offers a pension exclusion of up to $41,200 for qualifying retirees who:
- Are age 65 or older, or
- Are totally disabled
This exclusion applies to income from qualified “employee retirement systems,” including:
- 401(a) plans
- 401(k) plans
- 403(b) plans
- 457(b) plans
Important: Traditional IRAs and Roth IRAs do not qualify for this pension exclusion.
Military Retirement
Military retirees may subtract:
- Up to $20,000 if age 55 or older
- Up to $12,500 if under age 55
Senior Tax Credit
Retirees age 65+ may qualify for a nonrefundable tax credit if federal AGI does not exceed:
- $100,000 (single)
- $150,000 (married filing jointly)
Long-Term Care Insurance Credit
Maryland also offers a one-time tax credit (up to $500 per insured individual) for qualifying long-term care insurance policies.
Do Maryland retirees get a tax break?
As the above information shows, the answer is yes, sometimes, but only if income is structured in a way that qualifies for the above provisions.
Is Maryland Retirement Tax Dependent on Residency?
Yes. But you don’t have to be a year-round resident to be taxed. Maryland taxes residents on their income in the following ways:
- Full-year residents are generally taxed on all retirement income.
- Part-year residents are taxed on income earned while residents.
In other words, spending part of the year in another state does not automatically eliminate Maryland tax liability.
Does Maryland Tax Roth IRAs and Roth 401(k) Income?
If your Roth withdrawal is qualified (age 59½+ and meeting the five-year rule):
- It is not taxed federally.
- It is generally not taxed by Maryland.
Because contributions were already taxed, qualified Roth distributions are typically not taxed again at the state level. This distinction between traditional and Roth accounts can significantly impact long-term retirement tax exposure, and it’s part of the reason why it’s so important to be strategic about your retirement planning approach.
Incorporate Maryland Tax Rules Into Your Retirement Planning Strategy
Maryland max tax on retirement income, but there are also plenty of meaningful exclusions and credits when properly coordinated.
For a broader discussion of how Maryland taxes affect retirement income, including estate and inheritance considerations, you can review our related guide here.
Get Help Reducing Your Retirement Tax Liability
At Elite Income Advisors, we help retirees like you coordinate income planning, tax efficiency, and long-term financial security through a disciplined, education-first approach.
If you’re approaching retirement, now is the time to incorporate Maryland tax rules into your retirement planning strategy.
Learn more about our Retirement Planning services here.
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