Maryland Pension Exclusion

If you are 65 or older or totally disabled (or your spouse is totally disabled), you may qualify for Maryland's maximum pension exclusion of $36,200* under the conditions described in Instruction 13 of the Maryland resident tax booklet. If you're eligible, you may be able to subtract some of your taxable pension and retirement annuity income from your federal adjusted gross income.

*For calendar year 2023. For calendar year 2024, the maximum pension exclusion is $39,500.

This subtraction applies only if:

  1. You were 65 or older or totally disabled, or your spouse was totally disabled, on the last day of the tax year; and
  2. You included on your federal return income received as a pension, annuity or endowment from an "employee retirement system." These include qualified defined benefit and defined contribution pension plans, 401(a) plans, 401(k) plans, 403(b) plans, and 457(b) plans.
  3. A traditional IRA, a Roth IRA, a simplified employee plan (SEP), a Keogh Plan or an ineligible deferred compensation plan does not qualify.

Complete the Pension Exclusion Computation Worksheet (13A) shown in Instruction 13 in the Maryland resident tax booklet. Report all benefits received under the Social Security Act and/or Railroad Retirement Act on line 3 of the pension exclusion worksheet - not just those benefits you included in your federal adjusted gross income.

To receive the benefit of the pension exclusion, transfer the amount from line 5 of the worksheet to line 10a of Form 502, and complete the remainder of your return, following the line-by-line instructions.

Pension Exclusion for Retired Forest Rangers, Park Rangers, and Wildlife Rangers

Note: An individual taxpayer may not claim BOTH the standard Pension Exclusion and the Pension Exclusion for Retired Forest Rangers, Park Rangers, and Wildlife Rangers.

If you are 65 or older on the last day of the calendar year, you are totally disabled, or your spouse is totally disabled, and you have received qualified pension income, you should complete the Pension Exclusion Computation Worksheet (13A) regardless of your prior work history. It is permissible for one spouse to claim the standard Pension Exclusion and the other spouse to claim the Pension Exclusion for Retired Forest Rangers, Park Rangers, and Wildlife Rangers. if each spouse meets the applicable required criteria.

If you meet the below criteria, use the Retired Forest Rangers, Park Rangers, and Wildlife Rangers Pension Exclusion Worksheet (13E) to calculate your eligible pension exclusion:

  1. You were 55 or over on the last day of the tax year, AND
  2. You were not 65 or older, or totally disabled, or have a spouse who is totally disabled, AND
  3. You included on your federal return taxable income received as a pension, annuity, or endowment from an "employee retirement system". These include qualified defined benefit and defined contribution pension plans, 401(a) plans, 401(k) plans, 403(b) plans, and 457(b) plans qualified under Section 401(a), 403, or 457(b) of the Internal Revenue Code; AND
  4. The retirement income is attributable to your service as a forest ranger, park ranger, or wildlife ranger of the United States, the State of Maryland, or a political subdivision of Maryland.

Each spouse who meets the above requirements may be entitled to the exclusion. If each spouse is eligible, complete a separate column on the Retired Forest/Park/Wildlife Ranger Pension Exclusion Worksheet (13E). Combine your allowable exclusions from line 8 of the worksheet and enter the total amount on line 10b of Form 502.

Subtraction for Public Safety Retirement Income

An individual taxpayer may now claim both the standard Pension Exclusion and the Subtraction for Retired Correctional Officer, Law Enforcement Officer, or Fire, Rescue, or Emergency Services Personnel. Claim the subtraction using code letter v on Form 502SU. (See Instruction 13 in the Maryland resident tax booklet.) Note: When claiming the standard pension exclusion, do not include any amount subtracted for public safety retirement income.

To qualify, you must be a retired correctional officer, law enforcement officer, or fire, rescue, or emergency services personnel of the United States, the State of Maryland, or a political subdivision of Maryland. Only subtract income that you included on your federal return as taxable income received as a pension, annuity, or endowment from an employee retirement system qualified under Section 401(a), 403, or 457(b) of the Internal Revenue Code.