State-by-State Guide to Taxes on Retirees
Tool | December 2021

Maryland State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.

Maryland

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The Bottom Line
Flag of Maryland

Not Tax-Friendly

Maryland income taxes can be high for retirees. It's true that the state doesn't tax Social Security benefits. If you're 65 or older, you may qualify for a healthy exclusion on distributions from 401(k), 403(b) and 457 plans, along with income from public and private pensions. But here's the hitch: Any income outside those exclusions will be heavily taxed in the Free State. Plus, Maryland's 23 counties and Baltimore City levy their own income taxes.

The statewide median property tax rate is right around the national average, which helps. Sales taxes in Maryland are on the low end, too. (And there are no local sales taxes). But these aren't enough to balance out the state's high income taxes.

Income Tax Range

Low: 2% (on less than $1,000 of taxable income)

High: 5.75% (on more than $250,000 of taxable income for single filers; more than $300,000 for joint filers)

Maryland counties and Baltimore City levy additional income taxes.

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

For the 2021 tax year, taxpayers age 65 and older can exclude up to $34,300 of federally-taxed income from an employee retirement plan (e.g., a pension or 401(k) plan, but not an IRA). The exclusion amount for the 2022 tax year is not available yet.

Retired correctional officers, police officers, firefighters, rescue workers, and emergency services personnel age 55 to 64 can exclude up to $15,000 of federally-taxed income from an employee retirement plan. (Effective June 1, 2022, the exclusion also applies to retired forest rangers, park rangers, and wildlife rangers.)

Beginning with the 2022 tax year, single residents who are at least 65 years old with a federal adjusted gross income of $100,000 or less can claim a $1,000 tax credit. The credit amount is $1,750 for joint filers, surviving spouses, and head-of-household filers 65 or older with a federal AGI of $150,000 or less ($1,000 if only one spouse for a couple filing a joint return is eligible). The credit amount can be reduced in future years if revenue estimates are lowered by a certain amount.

Also starting in 2022, anyone who is at least 100 years old can exclude up to $100,000 of income from tax.

Up to $15,000 of income from a military retirement plan is exempt for taxpayers age 55 or older ($5,000 for taxpayers under age 55).

Railroad Retirement benefits are fully exempt.

Sales Tax

6% state levy. No local taxes.

Groceries: Exempt
Clothing: Taxable
Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 6% excise tax
Prescription Drugs: Exempt

Real Property Taxes

In Maryland, the median property tax rate is $1,078 per $100,000 of assessed home value.

Local governments can establish a property tax deferral program that allows residents 65 or older to defer the increase in their tax bill for county taxes. The deferred taxes become a lien on the property and must be repaid when the property is transferred.

Some localities are also authorized to provide property tax credits to residents age 65 or older.

A Renters' Tax Credit program provides up to $1,000 a year for qualifying residents. Requirements are relaxed for renters age 60 and older. Income limits apply.

Annual Car Taxes and Fees

No annual vehicle tax or fee is imposed.

Estate and Inheritance Taxes

Maryland's estate tax exemption is $5 million, plus any predeceased spouse's unused exclusion amount. Rates range from 0.8% to 16%.

While Maryland also has an inheritance tax (with a flat 10% rate), the list of heirs exempt from paying it includes the decedent's spouse, parents, grandparents, children, grandchildren, siblings, son-in-law, daughter-in-law and surviving spouse of a deceased child. In addition, property not exceeding $1,000 passing to any one person is not subject to the tax.