Military pay and Maryland state tax

Does the state tax personal income?

Maryland income tax law applies to both residents and nonresidents of the state, and the Comptroller publishes military-specific guidance under it.

Active duty pay

Military service members who are permanent residents of Maryland do not lose that residency by being stationed elsewhere, and remain within Maryland income tax law.

Stationed outside the state

A Maryland resident whose total military pay is under thirty thousand dollars may subtract up to fifteen thousand dollars of military pay earned outside the United States.

• The guidance states the subtraction for military pay earned outside the United States.
• The guidance states the subtraction where total military pay is under the stated threshold.

• Total military pay under $30,000 — tax year Current codified Maryland statute text retrieved 2026-08-15, with § 10-204 marked IN EFFECT
• Up to $15,000 of military pay earned outside the United States — tax year Current codified Maryland statute text retrieved 2026-08-15, with § 10-204 marked IN EFFECT

Combat pay

Maryland begins from the federal figure: the statute states that the Maryland adjusted gross income of an individual is the individual's federal adjusted gross income as adjusted under Part II of the subtitle, and the addition section adds back only the amounts it enumerates. The enumerated additions name no military pay, military compensation or combat zone pay, so pay excluded from federal adjusted gross income for service in a combat zone is not returned to the Maryland base by any stated addition.

Military retirement pay

Maryland law subtracts military retirement income from federal adjusted gross income to the extent it is included there: the first twelve thousand five hundred dollars where the individual is under age fifty-five on the last day of the taxable year, and the first twenty thousand dollars where the individual is at least fifty-five on that day.

• The statute states the lower amount where the individual is under age fifty-five on the last day of the taxable year.
• The statute states the higher amount where the individual is at least fifty-five years old on the last day of the taxable year.
• The statute defines military retirement income as retirement income received as a result of military service, and defines military service to include membership in a reserve component, membership in an active component, and active duty with the commissioned corps of the Public Health Service, the National Oceanic and Atmospheric Administration, or the Coast and Geodetic Survey.

• First $12,500 of military retirement income, individual under age 55 — tax year Current codified Maryland statute text retrieved 2026-08-15, with § 10-204 marked IN EFFECT
• First $20,000 of military retirement income, individual age 55 or older — tax year Current codified Maryland statute text retrieved 2026-08-15, with § 10-204 marked IN EFFECT

Survivor benefits

The Maryland subtraction statute defines military retirement income to include death benefits received as a result of military service, so a death benefit received as a result of military service falls within the same military retirement income subtraction and its age-based amounts.

Guard and Reserve

The Maryland subtraction statute defines military service to include membership in a reserve component as well as membership in an active component, so the military pay and military retirement income subtractions it states are written to reach reserve component service on the same terms.

Military spouses

Under Public Law 111-97 a service member's civilian spouse domiciled outside Maryland who is present solely to be with the service member is a nonresident regardless of how long they have lived in the state, and is not subject to Maryland tax on services performed in the state, while remaining taxable on Maryland property and non-service business income.

Filing

A nonresident whose only Maryland-connected income is military pay is not required to file a Maryland return.

Withholding

A nonresident civilian spouse asserting exempt status submits the Maryland withholding certificates to the employer timely and annually.