Partly taxed
How Maryland taxes retirement income
Maryland does not tax Social Security. Residents 65 and older, or totally disabled, can also exclude up to $40,600 of pension income for 2026, reduced by all the Social Security and Railroad Retirement benefits they receive.
The exclusion applies to income from an employee retirement system: pensions from defined benefit plans, including the Maryland State Retirement and Pension System and pensions from other states, plus 401(a), 401(k), 403(b) and 457(b) plans. Traditional and Roth IRAs, SEPs and Keogh plans do not qualify, so IRA withdrawals are taxed in full.
On top of the state rate of 2% to 6.5%, every Maryland county adds its own income tax of roughly 2.25% to 3.3%, so the combined rate is higher than the state rate alone. Retired law enforcement, fire and other public safety workers have a separate subtraction of their own.
Questions
Does Maryland tax teacher pensions?
Partly. At 65 or older, up to $40,600 is excluded for 2026, minus your Social Security. The rest is taxed by the state and county.
Are IRA withdrawals covered by the exclusion?
No. IRAs, Roth IRAs, SEPs and Keogh plans do not qualify. Rolling a 401(k) into an IRA can cost you the exclusion.
Does Maryland tax Social Security?
No.