Gov. Hogan hopes $1 billion in additional tax relief will make it more affordable for retirees to stay in Maryland. Courtesy of the Executive Office of the Governor By Rocky Mengle, Tax Editor January 17, 2020 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.SEE ALSO: State-by-State Guide to Taxes on Retirees 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. SEE ALSO: 10 Least Tax-Friendly States for Retirees Gov. Hogan also wants to fully exempt all pension and retirement income paid to veterans and first responders. Advertisement 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. SEE ALSO: 50 Best Places to Retire in the U.S.