A subtraction of military retirement income from Maryland taxable income. The cap is $20,000 at age 55 or older, and $12,500 under age 55. It is not a full exemption of retired pay.
Also called: military retirement, retired pay, pension, state income tax, Form 502, subtraction.
Maryland taxes military retirement income, then lets the filer subtract part of it. The Department of Veterans and Military Families and the Comptroller describe the same caps. On the last day of the tax year, a person age 55 or older may subtract up to $20,000 of military retirement income received that year. A person under 55 may subtract up to $12,500. The subtraction cannot be more than the retirement income actually received. Claim it on Form 502, using the military retirement line in the resident instructions.
Military retirement income means retirement income, including death benefits, from military service. That service can be active or reserve component service, the Maryland National Guard, or active duty with the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, or the Coast and Geodetic Survey. A surviving spouse or ex-spouse who receives the retirement income can claim the subtraction. The Comptroller also lists induction under the Selective Training and Service Act of 1940, or a similar later act.
This is not the general Maryland pension exclusion. A person who is 65 or older, or totally disabled, or whose spouse is totally disabled, may qualify for that exclusion on pension and annuity income from an employee retirement system. The Comptroller seniors page lists the maximum pension exclusion at $41,200. Read Instruction 13 before combining the two. VA disability compensation is not this retirement subtraction.
The figures above are the amounts on the department page updated January 16, 2026, and on the Comptroller 2025 filing instructions. Use the booklet for the year being filed.
Thresholds
No rating or income gate is recorded. Read the detail and the official source.
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Disclaimer
VetTOC is not affiliated with the U.S. Department of Veterans Affairs or the Department of Defense. Information is for reference only and is not an eligibility determination. Verify with VA, the relevant state or territory, or an accredited VSO.