Updated October 7, 2026. Quick answer: No, not once you move away. Maryland’s nonresident instructions say pensions and annuities “are not considered to be from Maryland sources for income tax purposes” when a nonresident receives them, while a Maryland resident may claim a pension exclusion of up to $41,200 at age 65 or older.
Federal civil service pensions in Maryland: does Maryland tax federal pensions.
How Maryland treats a pension earned elsewhere
| Item | What the state documents say |
|---|---|
| Nonresidents | The nonresident instructions treat pensions, annuities and IRA distributions received by a nonresident as income that is not from Maryland sources, so they go in the non-Maryland income column of Form 505. This rests on the Form 505 nonresident instructions. |
| Residents with a pension earned elsewhere | A Maryland resident return starts from federal adjusted gross income (Line 1), and the booklet has residents report pensions, IRAs and annuities from federal Lines 4b and 5b (Line 1d), so a pension earned in another state is part of a resident’s income. A pension exclusion then applies for a taxpayer 65 or older or totally disabled, capped at a maximum of $41,200 for 2025 and reduced by Social Security and railroad retirement benefits. Qualifying plans include 401(k) and 403(b) plans, but an IRA does not qualify. The source says: “65 or older on the last day of the calendar year”. This rests on Instruction 13 and the pension exclusion worksheet in the resident booklet. |
| Part-year residents (year of a move) | A part-year resident files Form 502 showing all income on the federal return, then subtracts income received when not a resident of Maryland. The pension exclusion is computed as if a full-year resident and then prorated by the months of Maryland residence divided by 12. If the pension began in the year the person became a Maryland resident, the factor is instead the months as a resident divided by the months the pension was received. The source says: “Prorate the amount on Line 5 by the number of months of Maryland residence divided by 12.” This rests on Instruction 13 and Instruction 26 of the resident booklet. |
| Rate | Maryland prints a graduated state schedule for 2025 that runs from 2.00% on the first $1,000 of taxable net income up to 6.50% on income over $1,000,000 for single filers. County and Baltimore City local income tax is added on top. |
| Return to file | Residents and part-year residents file Maryland Form 502. Nonresidents file Form 505. The source says: “you must file a Maryland resident income tax return”. |
A $40,000 move-year example
A retiree receives $40,000 of pension in the year of a move: $20,000 before the move date, as a Maryland resident, and $20,000 after leaving.
The first $20,000 can be taxed by Maryland; the rest is outside its reach under the federal rule below. Taxed wholly at the lowest printed rate, 2.00%, the tax on it is computed as $20,000 x 0.02 = $400; taxed wholly at the highest, 6.50%, it is computed as $20,000 x 0.065 = $1,300. The real figure falls between these bounds before any exclusion or credit. Federal tax still applies.
The federal rule that protects a nonresident
4 U.S.C. 114(a) bars a state income tax on retirement income of an individual “who is not a resident or domiciliary of such State”. Retirement income means any income from a qualified retirement plan, a simplified employee pension, a 403(a) or 403(b) plan, an individual retirement plan, an eligible 457 plan or a governmental plan. Income from a nonqualified deferred compensation plan counts only if it is part of a “series of substantially equal periodic payments” made for life or for a period of at least 10 years, or is a payment after termination of employment from a plan that exists only to provide benefits above the Internal Revenue Code limits, so not every payment is covered. Retired pay of a member of a uniform service is also covered.
Related: how Maryland taxes retirement income, whether Maryland taxes pensions, District Of Columbia to Maryland retirement taxes, Maryland to Arizona retirement taxes, out-of-state pension tax by state, and deferred compensation lump sums after a move.
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Answer againSources
- 2025 Maryland Resident Income Tax Return Instructions, Form 502 (Comptroller of Maryland): https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/instructions/2025/resident-booklet.pdf
- 2025 Maryland Nonresident Income Tax Return Instructions, Form 505 (Comptroller of Maryland): https://www.marylandcomptroller.gov/content/dam/mdcomp/tax/instructions/2025/nonresident-booklet.pdf
- 4 U.S.C. 114, Limitation on State income taxation of certain pension income (U.S. Government Publishing Office, 2023 edition): https://www.govinfo.gov/content/pkg/USCODE-2023-title4/html/USCODE-2023-title4-chap4-sec114.htm
Sources: the primary documents linked above, read on October 7, 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.