Updated October 4, 2026. Quick answer: It depends on the account. Maryland’s booklet answers whether 401(k) and 403(b) plans qualify for the pension exclusion: “A: Yes, but an IRA does not”. A 401(k) can qualify at 65 or older; an IRA is taxed in full.
State retirement-income forms, line by line: Maryland Form 502R.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Maryland tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Maryland tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Maryland tax withholding on IRA and 401(k) withdrawals.
What Maryland does with 401(k) and IRA withdrawals
The booklet lists who qualifies: “You were 65 or over or totally disabled, or your spouse was”. Plans that do not qualify include “Roth IRA, a rollover IRA, a simplified employee plan (SEP)”. The booklet gives the cap as “The maximum allowable exclusion is $41,200” for 2025. The statute’s list of excluded accounts includes “a rollover individual retirement account”.
| Item | What the documents say |
|---|---|
| 401(k) withdrawals | Pension exclusion up to $41,200 per person for 2025 at 65 or older (or disabled), reduced by Social Security and Railroad Retirement benefits |
| IRA withdrawals | No pension exclusion: a traditional, Roth or rollover IRA does not qualify |
| State rates | Graduated, 2.00% to 6.50% on 2025 Schedule I (6.50% over $1,000,000) |
| Source | Comptroller of Maryland, 2025 resident booklet; Tax-General 10-209 |
A $40,000 withdrawal
For a filer 65 or older with no Social Security, a $40,000 401(k) withdrawal is below the $41,200 cap, so it can be fully excluded. The same $40,000 from an IRA is fully included in Maryland income, and the tax it adds depends on your other income.
What changes in 2026
The documents read print no 2026 rate or exclusion change.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Maryland taxes pensions, how Maryland taxes retirement income, whether Maryland taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- 2025 Maryland Resident Income Tax Return Instructions (Resident Booklet, Form 502): https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/instructions/2025/resident-booklet.pdf
- Annotated Code of Maryland, Tax: General, Section 10-209 (pension subtraction): https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg§ion=10-209&enactments=false
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.