Maryland does not tax Social Security benefits

Maryland excludes all Social Security income from state income tax. If Social Security is your only income source, you owe no Maryland state tax on those payments. This applies whether you receive retirement, survivor, or disability benefits.

The federal government taxes Social Security differently depending on your total income, but Maryland's state tax code treats it as non-taxable income across the board. You will not see a state tax line item on your Social Security statement, and you do not need to report those benefits to Maryland when you file your state return.

Key Takeaways

  • Maryland does not tax Social Security retirement, survivor, or disability benefits at the state level, regardless of how much you receive.
  • The federal government may tax your Social Security if your combined income exceeds certain thresholds, but Maryland adds no state tax on top of that.
  • If Social Security is your only income, you will owe no Maryland state income tax, though you may still owe federal tax depending on your total income.
  • Other retirement income such as pensions, 401(k) withdrawals, and IRA distributions may be taxed by Maryland, even if your Social Security is not.

How federal taxation of Social Security works

The federal government taxes Social Security based on your "combined income," which is your adjusted gross income plus non-taxable interest plus half your Social Security benefits. If that combined total exceeds $25,000 for a single filer or $32,000 for married filing jointly, you may owe federal tax on up to 85 percent of your benefits.

Many people with modest retirement income fall below these thresholds and owe no federal tax on Social Security. If you do owe federal tax, you can arrange to have it withheld directly from your Social Security payment through Form W-4V, or you can pay estimated tax quarterly. Maryland does not layer its own state tax on top of the federal amount.

What other retirement income Maryland does tax

While Social Security is exempt, Maryland taxes most other retirement income. Withdrawals from traditional IRAs, 401(k) plans, and 403(b) plans are taxable as ordinary income. Pension income from private employers is also taxable, though military pensions receive a partial exemption.

If you are retired and living on a mix of income sources, you may owe Maryland state tax on pension or IRA withdrawals even though your Social Security payments are untouched. The state tax rate ranges from 5.75 percent to 5.85 percent depending on your income bracket. Knowing which income streams are taxable helps you plan withdrawals and estimate what you will owe.

Military and government pensions in Maryland

Military pensions receive special treatment under Maryland law. If you are a retired member of the U.S. armed forces, you can exclude up to $15,000 of military pension income per year from Maryland state tax. This exclusion applies only to military service pensions, not to other retirement accounts or civilian government pensions.

Federal employees and state or local government workers do not receive the same exemption for their pensions. Those pensions are taxed as ordinary income in Maryland. If you receive both a military pension and Social Security, the Social Security remains untaxed while the military pension gets the $15,000 annual exclusion.

How to report your income on your Maryland tax return

When you file your Maryland Form 502 state income tax return, you do not report Social Security benefits as income. You will report wages, self-employment income, interest, dividends, capital gains, and any taxable retirement distributions on the appropriate lines. Social Security straightforward does not appear on the form.

If you receive a Social Security statement or 1099-SSA form from the Social Security Administration, that document is for your records and for calculating federal tax liability. You do not need to attach it to your Maryland return. Keep it with your tax documents in case you are audited, but Maryland's tax code does not require you to report the amount.

When you might owe Maryland tax despite receiving Social Security

You can receive Social Security and still owe Maryland state tax if you have other income. If you work part-time, receive a pension, withdraw from an IRA, or have investment income, those sources are taxable. The fact that part of your income is Social Security does not shield the rest from taxation.

For example, if you receive $20,000 in Social Security and $30,000 from a pension, Maryland taxes only the $30,000 pension income. But if you receive $20,000 in Social Security and $50,000 from a part-time job, the $50,000 in wages is fully taxable. Your filing status, age, and total income determine whether you owe tax on the non-Social Security portion.

Standard deduction and filing requirements for retirees

Maryland allows a standard deduction that reduces your taxable income before tax is calculated. For the 2024 tax year, the standard deduction is $3,900 for single filers and $7,800 for married filing jointly. If your taxable income (from pensions, wages, or other sources) falls below these amounts, you owe no Maryland state tax.

Retirees age 65 and older do not receive an additional standard deduction boost in Maryland, unlike the federal return. You use the same standard deduction as younger filers. This means if your only taxable income is a small pension or part-time wages, you may fall below the threshold and owe nothing, even before considering Social Security.

Frequently Asked Questions

If I live in Maryland but receive Social Security from working in another state, is it still tax-free?

Yes. Maryland does not tax Social Security income regardless of where you worked or which state issued your benefits. The exemption applies to all Social Security payments received by Maryland residents.

Do I have to file a Maryland tax return if Social Security is my only income?

No. If Social Security is your sole income source, you have no Maryland tax filing requirement. You may still want to file if you paid estimated tax or had taxes withheld, to claim a refund.

Will receiving Social Security affect my ability to claim dependents or other tax credits?

Social Security income does not count toward the income limits for most Maryland tax credits. However, other income you receive may affect your may be able to access. Check the specific credit rules or consult a tax preparer if you claim credits.

What if I moved to Maryland after I started receiving Social Security?

Maryland taxes based on residency, not where you were when you began receiving benefits. Once you are a Maryland resident, your Social Security is exempt from state tax. Previous years in other states follow those states' rules.

Does Maryland tax Supplemental Security Income (SSI)?

No. Maryland does not tax SSI, just as it does not tax Social Security. SSI is a needs-based program for low-income individuals, and Maryland excludes it from state income tax.