Military retirement pay in Maryland
Varies
Does Maryland Tax Military Retirement Pay?
Short answer: Partly. Maryland lets retirees subtract the first $12,500 of military retirement income if under age 55, or the first $20,000 at age 55 or older (amounts in effect since tax year 2023). Retirees 65 and older, or disabled, may also use Maryland's general pension exclusion on military pay above the cap. Two 2026 bills to raise the subtraction (HB 761 and HB 857) did not pass. Maryland defines military retirement income to include death benefits. Other retirement income: Taxpayers 65+ (or totally disabled) may exclude up to $40,600 (2026) of employer-plan income from pensions, 401(k), 403(b), and 457(b) plans, reduced by Social Security/RRB received. IRA, Roth, SEP, and Keogh distributions do not qualify.
Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Records to keep: Keep your state return, W-2s and 1099s (1099-R, SSA-1099), and any state credit worksheets. Check your state revenue department's current-year instructions before you file.
Military retirement pay in Maryland
Varies
Individuals / Personal Taxes
Partly. Maryland lets retirees subtract the first $12,500 of military retirement income if under age 55, or the first $20,000 at age 55 or older (amounts in effect since tax year 2023). Retirees 65 and older, or disabled, may also use Maryland's general pension exclusion on military pay above the cap. Two 2026 bills to raise the subtraction (HB 761 and HB 857) did not pass. Maryland defines military retirement income to include death benefits. Other retirement income: Taxpayers 65+ (or totally disabled) may exclude up to $40,600 (2026) of employer-plan income from pensions, 401(k), 403(b), and 457(b) plans, reduced by Social Security/RRB received. IRA, Roth, SEP, and Keogh distributions do not qualify.
Business justification
Partly. Maryland lets retirees subtract the first $12,500 of military retirement income if under age 55, or the first $20,000 at age 55 or older (amounts in effect since tax year 2023). Retirees 65 and older, or disabled, may also use Maryland's general pension exclusion on military pay above the cap. Two 2026 bills to raise the subtraction (HB 761 and HB 857) did not pass. Maryland defines military retirement income to include death benefits. Other retirement income: Taxpayers 65+ (or totally disabled) may exclude up to $40,600 (2026) of employer-plan income from pensions, 401(k), 403(b), and 457(b) plans, reduced by Social Security/RRB received. IRA, Roth, SEP, and Keogh distributions do not qualify. Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Category
- Personal Tax Deductions