Is Social Security Taxed in Maryland? Current Federal Rates
Social Security benefits may be partially taxable at the federal level, depending on your income.
But Maryland does not tax Social Security income at all. That means retirees may owe federal tax on some of their benefits, but they won’t owe state tax on those same benefits in Maryland.
Social Security Tax Calculator (Federal + State)
How Social Security is Taxed Federally
At the federal level, Social Security benefits can be taxable depending on your overall income.
The IRS uses a formula called combined income, which includes:
- Half of your Social Security benefits
- All other income (wages, pensions, interest, dividends, and certain tax-exempt interest)
Your combined income is then compared to income thresholds.
If your income is below these thresholds, your benefits may not be taxed at all. If it exceeds them, a portion of your Social Security income is included in your federal taxable income.
How Maryland Treats Social Security Income
Maryland treats Social Security benefits differently from the federal government.
Under Maryland law, Social Security income is fully excluded from state taxable income. This applies to:
- Social Security retirement benefits
- Social Security disability benefits
- Railroad Retirement (Tier I) benefits
In practice, you may still report Social Security on your Maryland return, but it is subtracted entirely when calculating your taxable income. This results in no state tax owed on those benefits.
Why Maryland does not tax Social Security
Maryland’s decision to exclude Social Security is largely based on policy goals aimed at supporting retirees.
Because Social Security is often a primary source of income for seniors, the state has chosen not to tax it in order to reduce the tax burden on retirees, avoid duplicating federal taxation, and simplify tax treatment of retirement income.
This approach aligns Maryland with many other states that fully or partially exempt Social Security income from state taxes.
What income does Maryland tax
While Social Security is exempt, most other types of income are still subject to Maryland income tax.
- Wages and salaries
- Interest and dividends
- Capital gains
- Business and self-employment income
- Rental income
- Pension and retirement distributions such as 401(k), 403(b), and IRAs
Maryland taxes these income types using progressive state tax rates, generally ranging from about 2.00% to 6.50%, plus additional local county taxes.
Retirement Income and Maryland Subtractions
Maryland offers several deductions and exclusions that can reduce taxable retirement income, though these do not apply to Social Security.
Common examples include:
- Pension exclusion for qualifying retirees aged 65+
- Military retirement subtraction (subject to age-based limits)
- Public safety pension subtraction for eligible retirees
- Additional exemptions and credits for seniors
These provisions reduce taxable income but do not override the full exemption already applied to Social Security benefits.
Reporting Social Security on a Maryland tax return
Even though Social Security is not taxed, it must still be reported on Maryland tax forms.
- Social Security income is reported on Form 502 (Line 11)
- The full amount from your SSA-1099 is entered
- That same amount is then subtracted in full
This ensures the income is visible for verification purposes while ultimately being excluded from taxation.
For example, if your federal adjusted gross income includes Social Security, Maryland will start with that figure and then remove the Social Security portion before calculating your state tax liability.
Federal Vs Maryland Taxation
At the federal level, Social Security benefits may be partially taxable depending on your combined income.
At the state level in Maryland, those same benefits are completely exempt.
This means you may owe federal tax on Social Security, and you will not owe Maryland tax on Social Security.
Other retirement and investment income is still generally taxable in Maryland, subject to certain deductions and credits
