Maryland does not tax Social Security benefits

If you receive Social Security in Maryland, the state will not tax those benefits. Maryland is one of 38 states that does not impose a state income tax on Social Security payments. This means your federal Social Security income is exempt from Maryland state tax, regardless of how much you receive or your total household income.

However, you may still owe federal income tax on your Social Security benefits depending on your combined income — that is, your adjusted gross income plus nontaxable interest plus half your Social Security benefits. The federal threshold for taxation varies based on your filing status and whether you are married filing jointly, single, or head of household. Maryland's exemption applies only to state taxes, not federal ones.

Key Takeaways

  • Maryland does not tax Social Security benefits at the state level, so you will not owe Maryland state income tax on these payments.
  • You may still owe federal income tax on Social Security if your combined income exceeds the federal threshold, which depends on your filing status.
  • If you work and receive Social Security before full retirement age, federal earnings limits may reduce your benefits, but Maryland has no separate state earnings test.
  • You do not need to file a Maryland state return solely because of Social Security income, though you may need to file federally.

How federal taxation of Social Security works

The federal government taxes Social Security benefits based on your combined income, not on the benefits alone. Combined income is calculated as your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. If your combined income falls below the federal threshold for your filing status, you owe no federal tax on your benefits.

For 2024, the federal thresholds are $25,000 for single filers and $32,000 for married couples filing jointly. If your combined income exceeds these amounts, up to 50 percent of your benefits may be taxable, and in some cases up to 85 percent. These thresholds have not changed since 1984, which means more beneficiaries cross them each year as incomes rise.

Maryland residents who owe federal tax on Social Security must report it on their federal Form 1040. The IRS will calculate the taxable portion and include it in your federal tax liability. You can request that the Social Security Administration withhold federal taxes from your monthly benefit payment to avoid a tax bill at filing time.

Who must file a federal return with Social Security income

You must file a federal return if your gross income, including half your Social Security benefits, exceeds the standard deduction for your filing status. For 2024, the standard deduction is $14,600 for single filers age 65 and older, and $29,200 for married couples filing jointly where both are age 65 and older. If you are under 65, the standard deduction is lower.

Even if you do not owe federal tax, you may want to file a return if you had federal income tax withheld from wages or other income sources, because you could receive a refund. Additionally, if you receive other income such as interest, dividends, or rental income, you will likely need to file regardless of your Social Security amount.

Earnings limits if you work while receiving Social Security

If you have not yet reached your full retirement age and you work while receiving Social Security, the federal government will reduce your benefits if your earnings exceed a limit. For 2024, the limit is $23,400 per year. For every $2 you earn above this limit, Social Security reduces your benefit by $1. Maryland does not have a separate state earnings test — only the federal limit applies.

The earnings limit applies only to wages and self-employment income, not to pensions, investment income, or other retirement payments. Once you reach your full retirement age, the earnings limit no longer applies, and you can work without any reduction to your benefits.

Other Maryland tax considerations for retirees

Maryland does tax other types of retirement income. Pensions, 401(k) withdrawals, IRA distributions, and annuity payments are all subject to Maryland state income tax. If you receive a pension or withdraw from a retirement account, you will owe Maryland state tax on that income unless you may have access to for a specific exemption.

Maryland offers a tax credit for low-income retirees age 60 and older, but this credit is separate from the Social Security exemption. The credit reduces your state tax liability if your income falls below certain thresholds. You claim this credit on your Maryland state return, Form 502CR.

How to report Social Security on your Maryland return

You do not need to report Social Security benefits on your Maryland state return because Maryland does not tax them. If you file a Maryland return for other income — such as a pension, wages, or investment income — you can straightforward exclude your Social Security from the calculation. Maryland's tax forms do not have a line for Social Security income.

If you file a federal return, you will report your Social Security on Form SSA-1099, which you receive from the Social Security Administration each January. The IRS uses this form to determine whether any of your benefits are taxable at the federal level. Keep a copy for your records and attach it to your federal return if required.

Frequently Asked Questions

Do I need to file a Maryland state return if I only receive Social Security?

No. Since Maryland does not tax Social Security, you do not need to file a state return based on Social Security income alone. You may still need to file a federal return depending on your total income and filing status.

Will my Social Security be taxed if I move to another state?

No. Social Security benefits are exempt from state income tax in 38 states, including Maryland. If you move to one of the 12 states that do tax Social Security — such as Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, Vermont, or West Virginia — your benefits would become subject to state tax in that state.

Can I reduce my federal tax on Social Security?

You can reduce your combined income by minimizing other income sources, such as by timing withdrawals from retirement accounts or managing investment sales. You can also request that Social Security withhold federal taxes from your monthly payment. Consult a tax professional about strategies specific to your situation.

What if I receive both Social Security and a pension in Maryland?

Your Social Security is not taxed by Maryland, but your pension is. You will owe Maryland state tax on the pension income. Your combined income from the pension may also affect whether your Social Security is taxed at the federal level.

Where do I report Social Security on my federal return?

Report your Social Security benefits on lines 5a and 5b of Form 1040. The IRS will calculate the taxable portion based on your combined income. If you received a Form SSA-1099 from Social Security, use the amounts shown there.