Taxes in Maryland for Retirees

When it comes to retirement, where you live is obviously important. You may want to be close to family or friends, or near certain amenities or attractions, or any other number things that dictate your decision. But where you live can also have a major impact on your retirement income, thanks to different state tax laws.

What this means for retirees is that picking a specific state to live in requires careful study of their retirement tax laws. For example, taxes in Maryland for retirees are on the more attractive side compared to other states. Social Security income is not taxed, and withdrawals from retirement accounts are only partially taxed. Plus, there are some new tax provisions that directly benefit retirees.

So, if you’re considering retiring to Maryland, let’s take a look at how taxes might help stretch your nest egg.

Is Retirement Income Taxed in Maryland?

The Old Line State is especially attractive for many retirees since retirement income is not taxed in Maryland. Social Security and Railroad Retirement benefits are not taxed.

Other tax benefits for retirees in Maryland include:

• Pension Exclusion: Retirees can exclude up to $36,200 of their pension income from their taxable income.
• Senior Citizen Tax Credit: Retirees 65 and over may be eligible for a nonrefundable tax credit of up to $1,000.
• Property Tax Credit: Retirees who meet certain income requirements can claim a property tax credit of up to $1,680.

Is Military Retirement Pay Taxed in Maryland?

While military retirement pay is fully taxable in Maryland, there are some tax deductions and exclusions available for military retirees in Maryland. According to the Maryland Department of Veteran Affairs, if you or your military retiree spouse receives military retirement income, you can subtract up to $12,500. There is also "an increase to the first $20,000 for individuals who are at least 55 years old on the last day of the taxable year, of your military retirement income from your federal adjusted gross income before determining your Maryland tax."

Indirect Tax Benefits of Retiring to Maryland

Taxes in Maryland for retirees are indeed quite advantageous. This offers a major incentive for older adults looking to maximize their retirement income by limiting their tax liabilities through residency in Maryland. Yet there are more advantages available to people retiring in Maryland than just direct tax benefits.

One of the biggest and perhaps most influential aspects of the state of Maryland is that the relative cost of healthcare in the state is more affordable than the national average. According to Sperling’s Best Places, Maryland healthcare costs are listed at 84.2, which is below the average of 100 for the United States. The price of healthcare is an obvious concern for anyone, but for retirees it’s especially important considering that a person’s medical care needs change as they age. With lower healthcare costs in Maryland, your retirement savings can go even further – especially when taking tax benefits into account as well.

Advantages of Retirement in Maryland

Maryland is a moderately tax-friendly state for retirees. There are several specific tax provisions that benefit retirees, such as the military income exemption. In addition, there are many general tax benefits that are available to all taxpayers, such as the standard deduction and the personal exemption.

If you are a retiree in Maryland, you should make sure that you are taking advantage of all the tax breaks that are available to you. By doing so, you can help ensure that you have a comfortable retirement. Additionally, if you’re thinking about relocating, there are countless reasons to consider retiring in Maryland. The best towns to retire in Maryland offer cultural appeal, small-town feel, and four mild seasons.

Retirement Communities in Maryland

If you’ve decided that Maryland is the best place for you to retire, have you considered moving into a retirement community? Today’s retirement communities serve almost like cruise ships without the sea — wonderful accommodations, non-stop activities and excursions, and all the amenities you need for an ideal retirement. With Maryland’s tax friendliness and a quality retirement community, you can stretch your dollars even further and live your Golden Years to the fullest.

The communities at Acts Retirement-Life Communities go a step further and provide future health services such as assisted living or skilled nursing, as well as security, fitness and socialization benefits, and more.

Explore any of Acts’ Maryland retirement communities conveniently located in Chestertown, Adamstown, Easton, and Sykesville, or contact us with any inquiries or questions you have.