State retirement taxes · 2026
Does Maryland tax retirement income?
Short answer: Partly. Maryland does not tax Social Security benefits. At 65+, up to $40,600 of pension and 401(k) income is excluded in 2026, minus Social Security received — IRAs don’t qualify.
What’s taxed in Maryland
2026 rules.
- Social SecurityNot taxed
- Maryland does not tax Social Security benefits.
- PensionsPartly taxed
- At 65+, up to $40,600 of pension income is excluded in 2026, minus all Social Security received.
- IRA & 401(k) withdrawalsPartly taxed
- 401(k), 403(b) and 457(b) payouts qualify for the pension exclusion; IRA withdrawals are fully taxable.
- Military retirement payPartly taxed
- Up to $12,500 of military retirement pay is subtracted if you are under 55, or $20,000 at 55+. Amounts not subtracted can use the pension exclusion at 65+.
- Income tax rate6.5% top
- State rates from 2% to 6.5% (the 6.25% and 6.5% brackets were added for 2025), plus a county or Baltimore City income tax of 2.25% to 3.30%.
Does Maryland tax Social Security?
Maryland does not tax Social Security benefits.
Social Security and Railroad Retirement benefits are fully exempt. But the total you receive reduces the pension exclusion.
Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.
Are pensions taxed in Maryland?
At 65+, up to $40,600 of pension income is excluded in 2026, minus all Social Security received.
The pension exclusion is for people 65 or older (or totally disabled, or with a totally disabled spouse) at year-end. It covers pensions and annuities from an employee retirement system — defined-benefit and defined-contribution plans, 401(a), 401(k), 403(b) and 457(b). The maximum is $40,600 for 2026 ($41,200 for 2025), reduced by all Social Security and Railroad Retirement benefits received, not just the taxable part. Retired correctional, law enforcement and fire/rescue/EMS personnel have a separate subtraction, and retired forest, park and wildlife rangers 55+ can exclude up to $15,000.
Public vs. private pensions: Same exclusion for both.
Are IRA and 401(k) withdrawals taxed in Maryland?
401(k), 403(b) and 457(b) payouts qualify for the pension exclusion; IRA withdrawals are fully taxable.
A traditional IRA, Roth IRA, SEP, Keogh plan or ineligible deferred compensation plan does not qualify, so IRA distributions are taxed at state plus local rates.
Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.
Is military retirement pay taxed in Maryland?
Up to $12,500 of military retirement pay is subtracted if you are under 55, or $20,000 at 55+. Amounts not subtracted can use the pension exclusion at 65+.
What is Maryland’s income tax rate?
10 brackets, topping out at 6.5%.
State rates from 2% to 6.5% (the 6.25% and 6.5% brackets were added for 2025), plus a county or Baltimore City income tax of 2.25% to 3.30%. An extra 2% tax applies to net capital gains when federal AGI is over $350,000.
2026 brackets. Each rate applies to taxable income above the amount shown.
| Single | Married, joint | Rate |
|---|---|---|
| $0 | $0 | 2% |
| $1,000 | $1,000 | 3% |
| $2,000 | $2,000 | 4% |
| $3,000 | $3,000 | 4.75% |
| $100,000 | $150,000 | 5% |
| $125,000 | $175,000 | 5.25% |
| $150,000 | $225,000 | 5.5% |
| $250,000 | $300,000 | 5.75% |
| $500,000 | $600,000 | 6.25% |
| $1,000,000 | $1,200,000 | 6.5% |
Standard deduction and exemptions
Standard deduction for 2025: a flat $3,350 single or married filing separately, $6,700 joint or head of household, indexed after that (the 2026 return amounts aren’t published yet). Personal exemption $3,200, phased down above $100,000 of federal AGI ($150,000 joint) and gone above $150,000 ($200,000 joint). An extra $1,000 exemption for 65+ or blind. Itemized deductions are cut by 7.5% of federal AGI over $200,000.
What tax breaks do seniors get in Maryland?
Senior tax credit: $1,000 single if federal AGI is $100,000 or less; $1,750 joint if $150,000 or less ($1,000 if only one spouse is 65+). Plus the extra $1,000 exemption, the 65+ pension exclusion and a two-income married couple subtraction of up to $1,200.
What changed for 2026?
The 2025 budget law added the 6.25% and 6.5% brackets and the 2% capital gains tax, made the standard deduction flat and indexed, and raised the local tax cap to 3.30% (Allegany County rises to 3.20% and Kent to 3.30% for 2026). In 2026, HB 707 (adding IRAs to the pension exclusion) and HB 761 (raising the military subtraction) died in committee. The pension exclusion slips to $40,600 for 2026.
The 2026 pension exclusion is official; brackets set by 2025 law continue.
What we couldn’t confirm
- Maryland’s 2026 standard deduction amounts are not yet published (the withholding guide’s $3,400 is a withholding figure); we show 2025 amounts.
- The 2026 pension exclusion ($40,600) is lower than 2025’s ($41,200); it is the Comptroller’s published figure.
How Maryland compares with its neighbors
Thinking of moving across the line? Here’s how each bordering state treats retirement income in 2026.
- MarylandThis pageFriendlySocial Security Not taxedTop rate: 6.5% top
- DelawareFriendlySocial Security Not taxedTop rate: 6.6% top
- District of ColumbiaLess friendlySocial Security Not taxedTop rate: 10.75% top
- PennsylvaniaVery friendlySocial Security Not taxedTop rate: 3.07% flat
- VirginiaFriendlySocial Security Not taxedTop rate: 5.75% top
- West VirginiaFriendlySocial Security Not taxedTop rate: 4.58% top
State tax is half the picture — check the federal side
Maryland retirement tax questions
Is Maryland tax-friendly for retirees?
We rate Maryland “Friendly” for 2026. Maryland does not tax Social Security benefits. At 65+, up to $40,600 of pension and 401(k) income is excluded in 2026, minus Social Security received — IRAs don’t qualify. The top income tax rate is 6.5%.
Are required minimum distributions (RMDs) taxed in Maryland?
RMDs are withdrawals from IRAs and 401(k)-type plans, so they follow Maryland’s rules for those accounts. 401(k), 403(b) and 457(b) payouts qualify for the pension exclusion; IRA withdrawals are fully taxable.
Is military retirement pay taxed in Maryland?
Partly. Up to $12,500 of military retirement pay is subtracted if you are under 55, or $20,000 at 55+. Amounts not subtracted can use the pension exclusion at 65+.
What is Maryland’s income tax rate for 2026?
State rates from 2% to 6.5% (the 6.25% and 6.5% brackets were added for 2025), plus a county or Baltimore City income tax of 2.25% to 3.30%. An extra 2% tax applies to net capital gains when federal AGI is over $350,000.
Sources for Maryland
Primary sources only. We re-check them whenever an agency publishes new figures.
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