Maryland Retirement Taxes (2026): Both Death Taxes, Explained

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: Maryland’s reputation as a high-tax state for retirees comes from three things most guides only half-explain: it is the only state levying both an estate tax and an inheritance tax; its counties add their own income tax of up to 3.3% on top of the state’s graduated rates (to 6.5%); and its pension exclusion — up to $41,200 (TY2025, indexed) at 65+ — does not cover traditional IRA distributions at all. Social Security, at least, is never taxed.

How Maryland taxes retirement income (statute-cited)

Income tax	Graduated to 6.5% (10 brackets; 6.25%/6.5% top brackets added TY2025) plus county income tax up to 3.3% — the local layer most guides omit
Social Security	Not taxed (fully subtracted)
Pension exclusion (65+ or disabled)	Up to $41,200 for TY2025 (indexed to the max Social Security benefit; the Comptroller publishes each year’s figure), reduced by Social Security received (Md. Tax-Gen. §10-209)
The IRA trap	The exclusion applies only to employer-sponsored plans (pensions, 401(k), 403(b)) — traditional IRA distributions do not qualify and are fully taxable, a distinction that surprises rollover retirees
Public safety retirees (55+)	Separate $15,000 subtraction
Military retirement	$12,500 under 55; $20,000 at 55+ (Md. Tax-Gen. §10-207)

Planning note: because the exclusion covers a 401(k) but not an IRA, rolling an employer plan into an IRA before retiring in Maryland can convert excludable income into fully-taxable income. Sequence rollovers with this rule in mind.

Both death taxes, explained (and what didn’t change)

Estate tax: $5,000,000 exemption (fixed since 2019, not indexed), graduated rates up to 16%, with Maryland-only spousal portability. Inheritance tax: a flat 10% on “collateral” beneficiaries — nieces, nephews, cousins, friends, unmarried partners — while spouses, children and other lineal descendants, parents, grandparents, siblings, and stepchildren are exempt (as are transfers under $1,000). Inheritance tax paid is credited against any estate tax due, so the two don’t stack. Worked example: a $200,000 bequest to a niece costs $20,000; the same bequest to a sibling costs $0 — unlike Pennsylvania, Maryland exempts siblings.

Dated status note (July 2026): Governor Moore’s FY2026 proposals to repeal the inheritance tax and cut the estate exemption to $2M were rejected — the Budget Reconciliation and Financing Act of 2025 (HB 352) left both taxes unchanged. Guides describing those proposals as law are wrong. National context: estate tax by state · inheritance tax by state.

Probate costs

Personal-representative compensation is capped by statute: 9% of the first $20,000 plus 3.6% of the excess (Md. Est. & Trusts §7-601). Register of Wills probate fees scale with estate value (from ~$100 on small estates to $2,500+ on large ones). Small estates: $50,000 — or $100,000 when the surviving spouse is sole heir — qualify for small-estate administration (Md. Est. & Trusts §5-601). Context: probate cost by state · small-estate limits by state · will vs. trust calculator.

Is Maryland a good state to retire in for taxes?

The honest answer is “it’s complicated, and the county matters”: Social Security is untaxed and a 65+ retiree living on a government or employer pension can shelter most income under the exclusion — but IRA-based retirees get no exclusion, the county layer adds up to 3.3% everywhere, and bequests outside the immediate family face the 10% inheritance tax. Maryland rewards pension retirees with exempt heirs; it is expensive for IRA retirees with nieces and nephews in the will.

Maryland vs. its neighbors

State	Social Security	Pension / 401(k) / IRA	Estate tax	Inheritance tax
Maryland	Not taxed	Pension exclusion up to $41,200 at 65+ (not IRAs)	Yes — $5M exemption	Yes — 10% collateral heirs
Pennsylvania	Not taxed	Not taxed (retirement-age distributions)	None	Yes — 0/4.5/12/15% by heir class
Delaware	Not taxed	Exclude up to $12,500/person at 60+	None (repealed 2018)	None
Virginia	Not taxed	Taxable; age deduction up to $12,000 (income-tested)	None (repealed 2007)	None
New Jersey	Not taxed	Exclusion up to $100,000 MFJ at 62+ (income-tested)	None (repealed 2018)	Yes — Class C/D heirs

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and Maryland may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in Maryland

Per the SEC’s July 2026 Investment Adviser roster, Maryland has 225 SEC-registered advisory firms (#18 nationally) managing $3.10 trillion (#11 by AUM). Full breakdown: Maryland advisor statistics. Reviewing fee structures before or after a move: fee-drag calculator.

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Thinking about moving?

Four taxes change when you move state in retirement, not one: income tax on withdrawals, state estate tax, state inheritance tax, and what probate costs your heirs. Corridor comparisons involving Maryland:

Leaving Maryland? See leaving Maryland in retirement.

Compare any two states with the retirement tax comparison tool, or browse all corridors at the relocation hub.

What probate costs in Maryland

Maryland uses a hybrid standard — a statutory ceiling or floor with reasonableness applied inside it — so the fee has a bound but not a fixed number. Whether its small-estate route of $50,000 reaches real property is not clearly stated in the statute, so treat that as unresolved rather than permission. Full detail with the governing statute, the court filing fee and the threshold: Maryland probate cost. To price a specific estate, use the probate cost calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Maryland Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/maryland-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Maryland Retirement Taxes (2026): The Only State With Both Death Taxes – Plus the County Layer and the IRA Trap