Maryland's Tax Treatment of State Pensions and Retirement Income

Maryland does not tax most state pensions, but the rules depend on when you retired and what type of pension you receive

Maryland excludes most state and local government pensions from income tax entirely. If you worked for a Maryland state agency, a Maryland county, a Maryland city, or a Maryland school system and receive a pension from that employer, you generally owe no Maryland income tax on that pension income. This exclusion applies whether you retired before or after a certain date — the key factor is your employer, not when you left the job.

The exclusion does not cover federal pensions, military pensions, or pensions from private employers. It also does not cover income you earn after retirement — only the pension payment itself. If you have questions about whether your specific pension qualifies, you will need to know your former employer's type and location, because Maryland's rule is tied to government employment, not to the pension plan name.

Key Takeaways

Pensions from Maryland state agencies, counties, cities, and school systems are not subject to Maryland income tax.
Federal pensions, military pensions, and pensions from private companies are taxable in Maryland.
The exclusion applies to the pension payment itself, not to other retirement income like Social Security, IRA withdrawals, or wages you earn after retirement.
You do not need to file a separate form to claim the exclusion — you straightforward report the pension on your Maryland tax return and it is not taxed.
Other states may tax your Maryland pension, so you may owe tax to a different state even though Maryland does not tax it.

What counts as a Maryland government pension

A Maryland government pension is a regular payment you receive from a retirement plan sponsored by the State of Maryland, a Maryland county government, a Maryland city government, or a Maryland public school system. The payment must come from a pension plan — not a lump-sum distribution, not a 401(k) rollover, and not a deferred compensation plan like a 457(b).

The most common Maryland government pensions come from the Maryland State Retirement and Pension System (SRPS), which covers state employees; the Teachers' Retirement System of Maryland (TRS), which covers public school teachers; and county or municipal pension plans. If you worked for any of these employers and receive a monthly or annual pension check, that income is not taxed by Maryland.

The exclusion applies only to the pension itself. If you also receive a lump-sum payment when you retire, or if you roll money into an IRA and then withdraw it, those amounts are treated differently and may be taxable. The same applies if you work part-time after retirement or earn other income — only the pension payment is excluded.

Federal and military pensions are taxed in Maryland

Maryland taxes pensions from the federal government, including the Civil Service Retirement System (CSRS) and the Federal Employees Retirement System (FERS). It also taxes military pensions from the U.S. Army, Navy, Air Force, Marines, Coast Guard, and Space Force. These pensions are subject to Maryland income tax at the same rate as wages.

If you receive a federal or military pension, you will report it on your Maryland tax return as taxable income. You may be able to reduce the amount subject to tax through deductions or credits available to all Maryland taxpayers, but the pension itself is not excluded the way a Maryland government pension is.

How to report a Maryland government pension on your tax return

When you file your Maryland tax return, you will report your pension income on the form your pension plan sends you. The Maryland State Retirement and Pension System, the Teachers' Retirement System, and most county and municipal plans send a 1099-R form in January showing the total pension you received during the year.

You report the amount from the 1099-R on your Maryland return, but you do not owe Maryland income tax on it. The pension is excluded from Maryland taxable income. You still report it — do not leave it off your return — because the IRS and Maryland need to see all income sources. The exclusion is applied when Maryland calculates your tax, not when you decide what to report.

If you also receive other income — wages, Social Security, IRA withdrawals, or interest — you report those separately. Only the government pension is excluded. Your total tax is calculated on all other income, and you may owe Maryland tax on that other income even if your pension is tax-free.

Other states may tax your Maryland pension

If you move to another state after retiring from a Maryland government job, that state may tax your Maryland pension. Some states, like Pennsylvania and Illinois, exclude government pensions from tax just as Maryland does. Others tax all pension income regardless of where it comes from. A few states have rules that depend on when you retired or how much you earn.

You are responsible for understanding the tax rules of any state where you live or work. If you move out of Maryland, contact the tax authority in your new state to learn whether your Maryland pension is taxable there. You may owe tax to both states, or you may be able to claim a credit for taxes paid to another state.

Social Security and other retirement income in Maryland

Maryland does not tax Social Security benefits, which is a separate rule from the government pension exclusion. If you receive both a Maryland government pension and Social Security, neither is taxed by Maryland. However, if you have other income — wages, interest, IRA withdrawals, or a federal pension — you may owe Maryland tax on that income.

The Maryland government pension exclusion does not extend to other types of retirement savings. If you have a traditional IRA, a Roth IRA, a 401(k), or a 403(b) plan, withdrawals from those accounts are taxable in Maryland unless they fall under a different rule. The exclusion applies only to the pension payment itself from a Maryland government employer.

What to do if you are unsure whether your pension qualifies

If you are not certain whether your pension comes from a Maryland government employer, start by looking at your 1099-R form. The form shows the name of the plan or employer that issued it. If it says "Maryland State Retirement and Pension System," "Teachers' Retirement System of Maryland," or the name of a Maryland county or city, your pension is excluded from Maryland tax.

If the form shows a federal agency, the U.S. military, or a private company, your pension is taxable in Maryland. If you are still unsure, you can contact the Maryland Department of Revenue at 410-260-7980 or visit their website. Have your 1099-R form and the name of your former employer ready when you call.

Frequently Asked Questions

Do I have to file a Maryland tax return if I only have a government pension?

No. If your only income is a Maryland government pension, you have no Maryland tax to pay and generally do not need to file a Maryland return. However, if you have other income — wages, interest, a federal pension, or IRA withdrawals — you may need to file. Check the Maryland Department of Revenue website or call 410-260-7980 to confirm based on your total income.

What if I retired before a certain year — does that change whether my pension is taxed?

No. Maryland's exclusion for government pensions does not depend on when you retired. Whether you retired in 1990 or last year, if your pension comes from a Maryland state agency, county, city, or school system, it is not taxed by Maryland. The date of retirement does not matter.

Can I exclude a lump-sum payment I received when I retired?

No. The exclusion applies only to regular pension payments, not to lump-sum distributions. If you received a one-time payment when you left your job, that amount is taxable in Maryland. If you rolled that money into an IRA and later withdrew it, the withdrawal is also taxable.

If Maryland does not tax my pension, do I still have to report it on my return?

Yes. Report the full amount shown on your 1099-R form. Maryland excludes it from tax, but you must show it on your return so that the IRS and Maryland can see all your income sources. Failing to report it, even though it is not taxed, can cause problems with your return.

What if I work part-time after I retire — is that income taxed?

Yes. Wages you earn from work after retirement are taxable in Maryland, even if your pension is not. Only the pension payment itself is excluded. Any other income you have is subject to Maryland tax unless it falls under a different exclusion, like Social Security.

This guide is for general information only and is not medical, financial, legal, or other professional advice. For decisions specific to your situation, consult a qualified professional. See our Editorial Policy.