How Maryland taxes retirement income
Maryland does not tax Social Security benefits. Pensions and 401(k)/IRA withdrawals are partly taxed (there is an exclusion, then the rest is taxed). Social Security and Railroad Retirement Act benefits are fully exempt from Maryland income tax. A pension exclusion (indexed annually; $41,200 maximum for tax year 2025) applies to qualifying pension/annuity income from an employee retirement system for taxpayers 65+ or totally disabled, reduced dollar-for-dollar by Social Security/Railroad Retirement benefits received. The exclusion does NOT apply to traditional IRA, Roth IRA, rollover IRA, SEP, or Keogh distributions, those (and 401(k)/401(a)/403(b)/457(b) withdrawals outside the exclusion) are taxed as ordinary income at Maryland's regular graduated rates plus local tax.
Retirement income tax in Maryland, at a glance
| Income type | Taxed by Maryland? |
|---|---|
| Social Security | No |
| Pensions | Partially (exclusion applies) |
| 401(k) / IRA withdrawals | Yes |
| Estate / inheritance tax | Estate tax (exemption $5,000,000) |
| Avg. property tax rate | 0.92% of home value |
Does Maryland tax Social Security benefits?
No. Maryland does not tax Social Security benefits.
Does Maryland tax pensions and 401(k) or IRA withdrawals?
Partly. Social Security and Railroad Retirement Act benefits are fully exempt from Maryland income tax. A pension exclusion (indexed annually; $41,200 maximum for tax year 2025) applies to qualifying pension/annuity income from an employee retirement system for taxpayers 65+ or totally disabled, reduced dollar-for-dollar by Social Security/Railroad Retirement benefits received. The exclusion does NOT apply to traditional IRA, Roth IRA, rollover IRA, SEP, or Keogh distributions, those (and 401(k)/401(a)/403(b)/457(b) withdrawals outside the exclusion) are taxed as ordinary income at Maryland's regular graduated rates plus local tax.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- Maryland taxation of retirement income (Social Security, pensions, 401(k)/IRA): Maryland Department of Revenue / Taxation.
- Maryland estate / inheritance tax: Maryland tax authority.