Annapolis, MD – For many retirees in Maryland, tax season brings both complexity and opportunity. As you cross the 65-year milestone, state and federal tax systems offer additional avenues of relief—but the terminology and eligibility criteria can be confusing.
Understanding how Maryland’s tax code treats seniors—particularly the extra standard deduction or exemptions available—can make a meaningful difference to your bottom line. This article offers a comprehensive guide to those benefits: from exemption amounts and pension exclusions to credit opportunities and income thresholds.
Whether you’re calculating your return for the first time as a senior or simply refreshing your knowledge, you’ll find the key details laid out clearly here.
Maryland Tax Benefits for Seniors Over 65
- Personal Exemption Increase: Maryland allows a personal exemption of up to $3,200, subject to phase-outs based on federal AGI. Seniors (65 or older) and those who are blind can claim an additional $1,000 exemption per qualifying individual. This must be entered on Maryland Form 502B and attached to Form 502.
- Senior Tax Credit: Residents aged 65 or older may be eligible for a nonrefundable senior tax credit. For single filers, this credit amounts to $1,000, while jointly filing couples or heads of household may claim up to $1,750, provided they meet the federal AGI thresholds: $100,000 for singles; $150,000 for joint or head‑of‑household filers.
- Pension Exclusion: If you’re 65 or older (or totally disabled), Maryland offers a pension exclusion on certain pension or retirement annuity income. For this tax year, the exclusion could be up to $39,500.
More Benefits for Seniors
There are several other benefits for seniors above 65 in the state of Maryland as per AARP.
- Two‑Income Married Couple Subtraction: If both spouses receive income (wages, pension, interest, etc.) and file jointly, Maryland allows a subtraction of up to $1,200 or the lesser spouse’s income—whichever is less. Calculation assistance is available in Instruction 13 of the Maryland resident tax booklet.
- Social Security and Railroad Retirement: Maryland does not tax Social Security or Railroad Retirement benefits, even if they were taxable federally. You can continue to exempt them on your Maryland return by entering the taxable portion on the relevant lines of Form 502.
- Additional Subtractions (Centenarians, Military Retirement, Public Safety)
- Taxpayers aged 100 or older may subtract up to $100,000 in income.
- Military retirees 55 or older can subtract up to $20,000 (younger retirees up to $12,500) from AGI.
- Public safety retirees (e.g. police, firefighters) may subtract up to $15,000 if 55 or older.
How It All Adds Up: Example Scenarios
- Single Senior (65+): Eligible for an extra personal exemption of $1,000 plus the base $3,200 (subject to AGI limit), and a potential $1,000 senior tax credit.
- Married Couple Both 65+ :Each spouse may claim the extra $1,000 exemption. They may also claim a combined senior credit of $1,750. If both earn income, they may subtract up to $1,200 for the lower-income spouse.
- Pension Income Considerations: If pension or annuity income qualifies, seniors could exclude it up to $39,500 from taxable income, significantly lowering their taxable base.
- Social Security Benefits: Exempt entirely from Maryland state tax—but still important to report if taxable federally.
Conclusion
Maryland offers a host of well-structured benefits aimed at reducing the state tax burden for seniors over 65. From extra exemptions and credits to substantial exclusions on pension income, these provisions can make a meaningful difference when planning retirement finances.
Make sure to review your eligibility for each benefit carefully, consider how your AGI may affect phase‑outs, and weigh how pension and Social Security income are treated—but don’t leave money on the table.
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