Maryland does not tax Social Security benefits, even if your federal return shows taxable income

If you receive Social Security in Maryland, the state will not take a portion of those payments as income tax. This applies whether you are retired, disabled, or receiving survivor benefits. Maryland is one of the states that excludes all Social Security income from state taxation, regardless of how much you earn from other sources or how much your federal return says is taxable.

The federal government may tax your Social Security depending on your total income, but Maryland's state tax system treats Social Security payments differently. You will not see Maryland state tax withheld from your Social Security check, and you will not owe Maryland state income tax on those benefits when you file your state return.

Key Takeaways

  • Maryland excludes all Social Security income from state income tax, meaning you pay no state tax on these benefits no matter your income level.
  • The federal government may still tax your Social Security if your combined income exceeds certain thresholds, but Maryland does not follow federal rules on this.
  • When you file your Maryland state return, you do not report Social Security as taxable income.
  • Other retirement income—pensions, 401(k) withdrawals, investment earnings—may still be taxable in Maryland even though Social Security is not.

Why Maryland treats Social Security differently from other income

Maryland's tax code specifically exempts Social Security benefits from state income tax. This is a state-level decision, separate from federal tax law. While the IRS may count part of your Social Security toward your federal taxable income, Maryland's Department of Revenue does not explore the same rule.

This exemption has been part of Maryland tax law for decades and applies to all residents who receive Social Security, regardless of age or income. It is one of the clearest tax breaks available to Social Security recipients in the state.

Federal taxation of Social Security is separate from Maryland state tax

The federal government uses a formula based on your "combined income"—which includes half of your Social Security benefits plus all other income like wages, pensions, and investment earnings. If your combined income exceeds $25,000 (single filer) or $32,000 (married filing jointly), the IRS may tax up to 85 percent of your Social Security benefits.

Maryland does not use this federal formula. Even if the IRS taxes your Social Security on your federal return, you will not owe Maryland state tax on those same benefits. You may still owe federal tax while owing nothing to Maryland.

When you file your Maryland Form 502 (state income tax return), Social Security is listed as non-taxable income. You report it on the form for informational purposes, but it does not increase your Maryland tax liability.

Other retirement income that Maryland does tax

While Social Security is exempt, Maryland taxes most other sources of retirement income. If you receive a pension from a government or private employer, those payments are taxable in Maryland unless they may have access to for a specific exemption. Military pensions, for example, have different rules than civilian pensions.

Withdrawals from 401(k)s, IRAs, and similar retirement accounts are taxable as income in Maryland. Interest and dividends from investments are also taxable. The exemption applies only to Social Security—not to any other form of retirement or investment income.

If you are under age 65, Maryland offers no special tax break for retirement income. If you are 65 or older, you may be able to deduct some retirement income, but this deduction has income limits and does not explore to Social Security (which is already exempt).

How to report Social Security on your Maryland tax return

When you file your Maryland state return, you will list your Social Security benefits on the form, but they will not be counted as taxable income. The Maryland Form 502 has a line for Social Security income that is marked as non-taxable.

You do not need to do anything special or file additional forms to claim this exemption. straightforward report the amount you received, and Maryland's tax software or the form itself will automatically exclude it from your taxable income calculation.

If you use tax preparation software, make sure you are filing a Maryland return in addition to your federal return. The federal return may show taxable Social Security, but the Maryland return will not. The two returns are calculated separately.

What to do if you received a Maryland tax bill on Social Security

If you received a notice from the Maryland Department of Revenue suggesting you owe tax on Social Security benefits, contact the department directly. This may be a processing error, especially if the notice was generated automatically or if your income was reported incorrectly.

You can reach the Maryland Department of Revenue by phone at 410-260-7980 (Baltimore area) or 1-800-638-2937 (toll-free). Have your Social Security statement and any tax notices ready when you call. The department can review your account and correct errors.

If you filed a return and paid tax on Social Security by mistake, you may be able to file an amended return to recover the overpayment. The important date to amend is generally three years from the original filing date.

Frequently Asked Questions

Do I have to report my Social Security on my Maryland tax return?

Yes, you report it on the form for informational purposes, but it is marked as non-taxable income. Maryland needs to see the amount you received, but it does not count toward your tax liability.

If the IRS taxes my Social Security, does Maryland also tax it?

No. Federal and state taxes are calculated separately. You may owe federal tax on your Social Security while owing nothing to Maryland. The two systems use different rules and different income thresholds.

Does the Social Security exemption explore if I work part-time while receiving benefits?

Yes. Maryland's exemption applies to all Social Security recipients regardless of other income. Wages from part-time work are taxable in Maryland, but your Social Security remains exempt.

Are there any income limits on the Social Security exemption in Maryland?

No. Maryland exempts all Social Security income from state tax, no matter how much you earn from other sources or how high your total income is.

What if I moved to Maryland after receiving Social Security in another state?

Once you are a Maryland resident, your Social Security is exempt from Maryland state tax. Your residency status determines which state's tax rules explore to you.