Maryland isn't very tax-friendly for retirees, and many seniors are moving to more tax-friendly states as a result. But Maryland Gov. Larry Hogan wants to change that trend. He recently released a plan to lower income taxes by more than $1 billion for retirees in the state.
Currently, Maryland seniors can exclude up to $31,100 of federally-taxed income from a pension or 401(k) plan (but not from an IRA). There are also income tax exclusions available for the first $15,000 of military pensions and retirement income for certain first responders. However, when you add in local taxes, which can be as high at 3.2%, many Maryland retirees are taxed heavily on income that is not excluded from tax.
Under the governor's plan, there would be no Maryland tax on the first $50,000 of income for retirees with federal adjusted gross income under $100,000. The tax relief would be phased in over a five-year period. According to the governor, his plan would provide tax relief to 230,000 taxpayers and prevent thousands of Maryland retirees from fleeing the state for a more tax-friendly location.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Gov. Hogan also wants to fully exempt all pension and retirement income paid to veterans and first responders.
It's uncertain if the Maryland General Assembly will embrace Gov. Hogan's plan. Maryland Democrats are pushing their own tax reform agenda that would raise up to $2 billion for education reforms. Reaching an agreement on both plans seems unlikely.
-
What Services Are Open During the Government Shutdown?The Kiplinger Letter As the shutdown drags on, many basic federal services will increasingly be affected.
-
From Camping to Boating: Here's How to Stay Connected Off-GridThere's nothing quite like the peace of off-road adventures. However, ensure you have a stable connection in case you need it.
-
What’s the New 2026 Estate Tax Exemption Amount?Estate Tax The IRS just increased the exemption as we enter into a promising tax year for estates and inheritances.
-
IRS Updates 2026 Tax Deduction for People Age 65 and OlderTax Changes Adjustments to the extra standard deduction can impact the tax bills of millions of older adults. Here are some new amounts to know for 2026.
-
IRS Reveals New 2026 Child Tax Credit and other Family Credit AmountsTax Credits Key family tax breaks are higher for 2026, including the Earned Income Tax Credit and the Adoption Credit. Here's what they're worth.
-
Standard Deduction 2026 Amounts Are HereTax Breaks What is the standard deduction for your filing status in 2026?
-
Claiming the Standard Deduction? Here Are Five Tax Breaks for Retirement in 2025Tax Tips If you’re retired and filing taxes, these five tax credits and deductions could provide thousands in relief (if you qualify).
-
New Tax Rules: Income the IRS Won’t Touch in 2025Income Taxes From financial gifts to Roth withdrawal rules, here’s what income stays tax-free under the new Trump 2025 tax bill, and some information on what’s changed.
-
Three Popular Tax Breaks Are Gone for Good in 2026Tax Breaks Here's a list of federal tax deductions and credits that you can't claim in the 2026 tax year. High-income earners could also get hit by a 'surprise' tax bill.
-
Tax Brackets 2025 Quiz: How Much Do You Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
