Updated October 5, 2026. Quick answer: Yes, with a subtraction at 65. Maryland subtracts “annuity, pension, or endowment income from an employee retirement system” for a filer who is “at least 65 years old or is totally disabled”, up to the Comptroller’s printed maximum of $41,200 less Social Security and Railroad Retirement benefits.
State retirement-income forms, line by line: Maryland Form 502R.
Next door, the District of Columbia’s treatment of annuity income: does District of Columbia tax annuity income.
How Maryland treats annuity income
| Item | What the documents say |
|---|---|
| Treatment | Taxed on the graduated schedule; an age-65 subtraction for employer-plan annuity income |
| Rates | 2%, 3%, 4%, 4.75%, 5%, 5.25%, 5.5%, 5.75%, 6.25% and 6.50%; for example “4.75% of Maryland taxable income of $3,001 through $100,000” |
| Maximum subtraction | “The maximum allowable exclusion is $41,200” (the worksheet carries no tax year) |
| Reduced to zero | “the pension exclusion will be zero (0)” when Social Security and Railroad Retirement benefits exceed $41,200 |
| Not eligible | The statute excludes “an individual retirement account or annuity under § 408” from the employee retirement system definition |
A $24,000 example
A filer 65 or older with $24,000 of annuity payments from an employer plan under IRC 401(a), 403 or 457(b) and no Social Security subtracts all of it, so it adds $0 of Maryland state tax.
With $20,000 of Social Security, the subtraction ceiling is $41,200 minus $20,000 = $21,200, so $24,000 minus ($41,200 minus $20,000) = $2,800 stays in Maryland income.
An annuity inside an individual retirement account gets no subtraction; at the 4.75% line the tax is computed as $24,000 x 4.75% = $1,140.
What changes in 2026
The latest documents read print no 2026 change to the way annuity income is taxed.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal side in Topic no. 410, Pensions and Annuities and Publication 575, Pension and Annuity Income.
Related: whether Maryland taxes pensions, how Maryland taxes retirement income, state tax on 401(k) and IRA withdrawals, how a surrendered annuity is taxed, and pension and annuity decisions.
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Answer againSources
- Md. Code, Tax-General §10-209 (Maryland General Assembly): https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg§ion=10-209&enactments=false
- Md. Code, Tax-General §10-105 (Maryland General Assembly): https://mgaleg.maryland.gov/mgawebsite/Laws/StatuteText?article=gtg§ion=10-105&enactments=false
- Pension Exclusion Computation Worksheet (13A) (Comptroller of Maryland): https://www.marylandtaxes.gov/forms/worksheets/Pension-Exclusion-Worksheet.pdf
Sources: the primary documents linked above, read on October 5, 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.