Maryland retirement taxes at a glance (2026)
| State income tax | Graduated, top rate 6.5%Maryland has 10 brackets from 2% to 6.5% (top rate over $1 million single / $1.2 million joint), plus county income taxes. |
|---|---|
| Social Security | Not taxedMaryland does not tax Social Security benefits. |
| Pensions | Partly taxedResidents 65+ (or disabled) can exclude up to $41,200 (2025 amount) of employer pension income, with no income limit. Exclusion: up to $41,200 (age 65+). |
| 401(k) and IRA withdrawals | Partly taxed401(k)-type employer plan payouts can qualify for the pension exclusion, but IRA withdrawals are fully taxed. |
| Government pensions | Partly taxedPublic pensions are taxed but qualify for the same age-65 pension exclusion. |
| Military retirement pay | Partly taxedMilitary retirees under 55 can exclude up to $12,500; the exclusion rises to $20,000 at age 55. |
| Estate tax | Yes, above $5,000,000Maryland taxes estates above $5 million at rates up to 16%. |
| Inheritance tax | YesMaryland charges a 10% inheritance tax on property passing to non-relatives; close relatives are exempt. |
| Property tax help for seniors | Residents 65+ with federal AGI up to $100,000 (single) or $150,000 (joint) can claim a senior tax credit of $1,000 to $1,750 against income tax. |
| Sales tax | State sales tax is 6% on most goods. |
Recent changes and good to know
- The 2025 budget law added 6.25% and 6.5% top brackets, retroactive to January 1, 2025.
- A 2% capital gains surtax applies when federal AGI exceeds $350,000.
- The pension exclusion is indexed each year; the 2026 amount was not confirmed, so the 2025 figure ($41,200) is shown.
How to lower your retirement taxes in Maryland
- Mix your income sources. Roth IRA withdrawals are tax-free at the federal level and generally in Maryland too, so a Roth conversion before retirement can cut state tax later. Try the Roth conversion calculator.
- Watch federal Medicare costs. Large IRA withdrawals can raise your Medicare premiums. Check the 2026 IRMAA brackets.
- Think about your heirs. See what your IRA will really cost your family with the Family Tax Rate calculator.
- Comparing states? These have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming.
Frequently asked questions
Does Maryland tax retirement income?
Partly: Maryland exempts Social Security and gives residents 65+ a $41,200 pension exclusion, but taxes IRAs and has both estate and inheritance taxes.
Does Maryland tax Social Security?
Maryland does not tax Social Security benefits.
Does Maryland tax pensions?
Residents 65+ (or disabled) can exclude up to $41,200 (2025 amount) of employer pension income, with no income limit.
Does Maryland tax 401(k) and IRA withdrawals?
401(k)-type employer plan payouts can qualify for the pension exclusion, but IRA withdrawals are fully taxed.
Does Maryland tax military retirement pay?
Military retirees under 55 can exclude up to $12,500; the exclusion rises to $20,000 at age 55.
Does Maryland have an estate or inheritance tax?
Maryland taxes estates above $5 million at rates up to 16%. Maryland charges a 10% inheritance tax on property passing to non-relatives; close relatives are exempt.
Sources (last verified 2026)
- Maryland State Tax Guide — AARP (2026-04-02)
- State Individual Income Tax Rates and Brackets, 2026 — Tax Foundation (2026-02-17)
- Maryland Retirement Tax Friendliness — SmartAsset (2025)
Educational content only, not tax, legal or investment advice. Plans and tax laws change; confirm details with your employer's plan documents or your state revenue department. Smart Financial Lifestyle is not affiliated with any employer named on this site.