Does Maryland tax military retirement?

Partly. You subtract $12,500 under 55 or $20,000 from 55; the rest is taxed at state and county rates, though at 65+ more can fall under the pension exclusion.

Does Maryland's pension exclusion cover IRAs?

No. It covers employer plans (pensions, 401(k), 403(b), 457(b)) and is reduced by Social Security received.

Maryland retirement taxes in 2026: military retired pay, pensions and property tax

Short answer

Maryland does not tax Social Security. Military retired pay is partly exempt: you subtract $12,500 if you're under 55, or $20,000 from 55. At 65 or older, more can go into Maryland's pension exclusion. The rest is taxed at the state rate (4.75% for most incomes) plus a county income tax of 2.25% to 3.30%. Veterans rated 100% service-connected, permanent and total pay no property tax on their home.

Not tax advice. Rules change; confirm with the Comptroller of Maryland, SDAT or a tax professional.

Maryland at a glance (2026)

	Maryland
State income tax	2% to 6.5%; 4.75% on taxable income from $3,001 to $100,000 (single) or $150,000 (joint)
County income tax	2.25% (Worcester) to 3.30% (Dorchester, Kent); half of jurisdictions at 3.20%
Social Security	Not taxed
Military retired pay	$12,500 subtracted under 55; $20,000 from 55
Pension exclusion (65+ or disabled)	$41,200 for 2025; about $40,600 reported for 2026 (confirm). Reduced by Social Security received; employer plans only, not IRAs
65+ extras	$1,000 extra exemption; senior tax credit up to $1,000 single / $1,750 joint
Homeowners' Property Tax Credit	Any age; household income up to $60,000, net worth under $200,000
100% P&T disabled veteran	Full exemption on the home
Average property tax	About 0.92% of home value a year

Income tax

Since 2025, Maryland's rates run from 2% to 6.5%, with new 6.25% and 6.5% brackets above $500,000 (single) or $600,000 (joint). Most retirees fall in the 4.75% bracket. On top of that, every county and Baltimore City charges an income tax: 2.25% to 3.30% in 2026, with half of the 24 jurisdictions at 3.20%. High earners also pay a 2% surtax on capital gains when federal AGI exceeds $350,000 (gains inside retirement accounts are exempt). Sources: Tax-General §10-105; Comptroller of Maryland, Tax Alert (rev. Dec 2025) and Withholding Tax Facts (Jan 2026).

Military retired pay

Subtract $12,500 if you're under 55 on December 31, or $20,000 from age 55. Military retirement income includes death benefits from military service. At 65 or older, military pay above the subtraction can go into the pension exclusion. Bills to raise the subtraction in 2026 weren't enacted. Sources: Tax-General §10-207(q); Maryland Department of Veterans and Military Families (Jan 2026).

Pensions, IRA and 401(k)

At 65 or older (or totally disabled), the pension exclusion covers employer plans: pensions, 401(k), 403(b) and 457(b). The maximum was $41,200 for 2025. The Comptroller sets it each year; trade press reports about $40,600 for 2026, but the Comptroller hasn't posted it yet, so confirm before you rely on it. It's reduced dollar for dollar by Social Security you received, and it doesn't cover IRAs, rollover IRAs, SEPs or Keoghs. People 65+ also get a $1,000 extra exemption and a nonrefundable senior tax credit: $1,000 single (federal AGI up to $100,000), $1,750 joint when both spouses are 65+ (AGI up to $150,000). Sources: Comptroller Pension Exclusion Worksheet 13A; 2025 resident booklet; Technical Bulletin No. 51.

Property tax relief

Homeowners' Property Tax Credit (any age): household income up to $60,000 and net worth under $200,000, not counting the home or retirement accounts. It limits the tax on the first $300,000 of assessed value based on income. File by October 1 (February 14 from the 2027–28 tax year).
Homestead credit: caps the yearly rise in your home's taxable assessment at 10%, or lower where the county sets it (for 2026–27, for example, 2% in Anne Arundel, 3% in Prince George's, 4% in Baltimore County). It requires a one-time application.

Sources: Maryland SDAT, Homeowners' Property Tax Credit and Homestead Tax Credit; Chapter 782 of 2026.

Disabled veterans

The home is fully exempt for veterans rated 100% service-connected, permanent and total, or rated lower but found permanently unemployable by the VA. A surviving spouse keeps it while owning and living there (remarriage ends it), as does the surviving spouse of a service member killed in the line of duty. Apply with SDAT any time. Sources: Maryland SDAT, Property Tax Exemptions; Tax-Property §7-208; Maryland Department of Veterans and Military Families.

Common mistakes

Expecting the pension exclusion to cover IRA withdrawals. It doesn't.
Forgetting the Social Security offset, which can shrink the pension exclusion to zero.
Forgetting county income tax, which adds 2.25% to 3.30%.
Missing the move from $12,500 to $20,000 in the year you turn 55.
Not filing the one-time homestead credit application.

Moving here?

Federal rules: Is military retirement taxable?
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FAQ

Does Maryland tax military retirement?: Partly. You subtract $12,500 under 55 or $20,000 from 55; the rest is taxed at state and county rates, though at 65+ more can fall under the pension exclusion.
Does Maryland tax Social Security?: No.
Does Maryland's pension exclusion cover IRAs?: No. It covers employer plans (pensions, 401(k), 403(b), 457(b)) and is reduced by Social Security received.
Do 100% disabled veterans pay property tax in Maryland?: No property tax on their home, if rated 100% service-connected permanent and total, or permanently unemployable.

Sources

Last reviewed October 21, 2026. Not tax advice.