Maryland Tax Exemption for Military Retired Pay

Maryland Income Tax Subtraction for Military Retired Pay: Retired Service members can subtract up to $5,000 of their military retired pay from their gross income before determining their Maryland tax. At age 55 this subtraction increases to $15,000.

Who is eligible for Maryland Income Tax Subtraction for Military Retired Pay? This subtraction is available to retired Service members who are receiving military retired pay from an active or reserve component of the U.S. Armed Forces. Thrift Savings Plan (TSP) does not withhold taxes for state or local income tax, but it is reported annually on IRS Form 1099-R. All TSP distributions are subject to state taxes and early distributions may incur higher taxes.

Source: Maryland Military and Veterans Benefits | The Official Army Benefits Website