Maryland does not tax Social Security benefits, no matter how much you receive or how much other income you have

If you live in Maryland and receive Social Security, you will not owe state income tax on those benefits. This applies whether you are retired, disabled, or receiving survivor benefits. Maryland is one of 38 states that does not tax Social Security income at the state level.

However, you may still owe federal income tax on your Social Security benefits depending on your total income. The federal government uses a formula based on your "combined income" — which includes half your Social Security benefits plus all other income — to determine whether any of your benefits are taxable. Maryland's decision not to tax Social Security does not change your federal tax situation.

Key Takeaways

  • Maryland state income tax does not explore to Social Security benefits under any circumstances.
  • Federal income tax may still explore to your Social Security benefits if your combined income exceeds certain thresholds, which vary depending on your filing status.
  • Combined income includes half your Social Security benefits plus wages, pensions, interest, dividends, and other income sources.
  • You should report your Social Security income on your federal return even though Maryland will not tax it.

How federal taxation of Social Security works

The IRS taxes Social Security benefits using a two-tier system based on your combined income. Combined income is calculated as your adjusted gross income plus nontaxable interest plus half your Social Security benefits.

For the 2024 tax year, if you file as single and your combined income is between $25,000 and $34,000, you may owe federal tax on up to 50 percent of your benefits. If your combined income exceeds $34,000, you may owe federal tax on up to 85 percent of your benefits. For married couples filing jointly, these thresholds are $32,000 and $44,000. If you are married filing separately, the thresholds are much lower — often $0 to $9,000 — and you will almost certainly owe tax on your benefits.

These thresholds do not change with inflation, so more people fall into the taxable range each year. You can use IRS Publication 915 to calculate exactly how much of your benefits may be taxable, or you can ask a tax professional to work through the calculation with you.

What income counts toward the federal threshold

Combined income includes more than just your Social Security. It includes wages from work, net income from self-employment, interest and dividends (even tax-exempt interest), capital gains, rental income, pension distributions, and withdrawals from traditional IRAs or 401(k)s.

Income that does not count toward combined income includes Supplemental Security Income (SSI), workers' compensation, veterans' benefits, and certain other need-based information programs. If you are still working and earning wages, those wages count in full toward your combined income threshold, which can push you into the taxable range even if your Social Security alone would not.

Reporting Social Security on your Maryland return

When you file your Maryland state income tax return, you do not report Social Security benefits at all. Maryland Form 502 (the state income tax return) has no line for Social Security income because the state does not tax it. You straightforward skip that income entirely on the state return.

On your federal return (Form 1040), you must report your Social Security benefits on lines 5a and 5b, even if none of them are taxable. The IRS uses this information to verify your income and cross-check against the Social Security Administration's records. Failing to report it can trigger a notice from the IRS, even if you owe no tax.

When you receive a Social Security statement

The Social Security Administration sends you a Form SSA-1099 each January showing the total benefits you received in the previous year. You will receive one form for each Social Security account you have — if you receive both retirement and spousal benefits, you may get two forms.

Use the amount shown on your SSA-1099 to fill in line 5a of your federal Form 1040. Do not use the amount on your state return, because Maryland does not require you to report it. Keep your SSA-1099 with your tax records for at least three years in case the IRS asks questions.

Planning ahead if you are close to the federal threshold

If your combined income is close to the federal threshold, you have limited options to reduce the amount of your benefits that are taxable. You cannot reduce your Social Security benefits themselves, but you can sometimes reduce other income sources.

For example, if you are still working, earning less in a given year would lower your combined income. If you have a choice about when to withdraw from a traditional IRA or 401(k), delaying that withdrawal to a year when you have less other income could help. If you have significant interest or dividend income, moving to tax-exempt municipal bonds would reduce combined income (though tax-exempt interest still counts toward the threshold). These strategies work better when you plan ahead with a tax professional who understands your full situation.

Other Maryland tax considerations for retirees

While Maryland does not tax Social Security, it does tax other retirement income. Distributions from traditional IRAs, 401(k)s, and pensions are taxable at the Maryland state level. Military pensions receive a partial exemption — you can exclude up to $15,000 of military retirement pay from your Maryland taxable income if you are age 55 or older.

Maryland also does not tax income from certain retirement accounts. Distributions from Roth IRAs are not taxable at the state level (though they may affect your federal Social Security taxation through combined income). If you are receiving multiple types of retirement income, your total Maryland tax bill depends on the mix of sources, not just Social Security.

Frequently Asked Questions

Will I owe Maryland tax if I move to Maryland after receiving Social Security elsewhere?

No. Maryland does not tax Social Security benefits regardless of when you started receiving them or where you lived before. As long as you are a Maryland resident when you file, Social Security is not taxable to Maryland. Your residency status is what matters, not the timing of your benefits.

What if I receive both Social Security and SSI?

SSI (Supplemental Security Income) is not taxed by Maryland or the federal government. Only your Social Security benefits count toward the federal combined income threshold. Report only the Social Security amount on your federal return, not the SSI.

Do I still need to file a Maryland return if my only income is Social Security?

No. If Social Security is your only income and you have no other income sources, you have no Maryland filing requirement. However, you must still file a federal return if your combined income exceeds the federal threshold for your filing status, because the IRS may tax your benefits.

Can I deduct Maryland taxes I paid on Social Security from my federal return?

This question does not explore in Maryland because Maryland does not tax Social Security. If you paid state taxes to another state on Social Security benefits before moving to Maryland, you may be able to claim a credit on your federal return, but you should consult a tax professional about your specific situation.

Does Maryland tax my spouse's Social Security if we file jointly?

No. Maryland does not tax Social Security benefits for any household member, regardless of filing status. Both spouses' benefits are excluded from Maryland taxable income. However, your combined income for federal purposes includes both spouses' benefits if you file jointly federally.