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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
*hb0707*
HOUSE BILL 707
Q3 6lr0917
HB 355/25 – W&M
By: Delegates Grammer, Arikan, Chisholm, M. Morgan, Nawrocki, and Szeliga
Introduced and read first time: February 2, 2026
Assigned to: Ways and Means
A BILL ENTITLED
AN ACT concerning 1
Income Tax – Subtraction Modification – Retirement Income 2
FOR the purpose of including income from certain retirement plans within a certain 3
subtraction modification allowed under the Maryland income tax for certain 4
individuals who are at least a certain age or who are disabled or whose spouse is 5
disabled; altering the maximum amount of the subtraction modification for certain 6
taxable years; repealing a limitation on the maximum amount of the subtraction 7
modification; providing that income included in certain subtraction modifications 8
may not be taken into account for purposes of the subtraction modification for 9
retirement income; and generally relating to a subtraction modification under the 10
Maryland income tax for retirement income. 11
BY repealing and reenacting, with amendments, 12
Article – Tax – General 13
Section 10–209 14
Annotated Code of Maryland 15
(2022 Replacement Volume and 2025 Supplement) 16
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 17
That the Laws of Maryland read as follows: 18
Article – Tax – General 19
10–209. 20
(a) In this section: 21
(1) [“employee retirement system” means a plan: 22
(i) established and maintained by an employer for the benefit of its 23
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employees; and 1
(ii) qualified under § 401(a), § 403, or § 457(b) of the Internal 2
Revenue Code; and 3
(2) “employee retirement system” does not include: 4
(i) an individual retirement account or annuity under § 408 of the 5
Internal Revenue Code; 6
(ii) a Roth individual retirement account under § 408A of the 7
Internal Revenue Code; 8
(iii) a rollover individual retirement account; 9
(iv) a simplified employee pension under Internal Revenue Code § 10
408(k); or 11
(v) an ineligible deferred compensation plan under § 457(f) of the 12
Internal Revenue Code.] “QUALIFIED RETIREMENT PLAN” MEANS: 13
(I) A RETIREMENT PLAN QUALIFIED UNDER § 401(A), § 403, OR 14
§ 457(B) OF THE INTERNAL REVENUE CODE; 15
(II) AN INDIVIDUAL RETIREMENT ACCOUNT OR ANNUITY UNDER 16
§ 408 OF THE INTERNAL REVENUE CODE; 17
(III) A ROTH INDIVIDUAL RETIREMENT ACCOUNT UNDER § 408A 18
OF THE INTERNAL REVENUE CODE; 19
(IV) A ROLLOVER INDIVIDUAL RETIREMENT ACCOUNT; OR 20
(V) A SIMPLIFIED EMPLOYEE PENSION UNDER § 408(K) OF THE 21
INTERNAL REVENUE CODE; AND 22
(2) “QUALIFIED RETIREMENT PLAN” DOES NOT INCLUDE AN 23
INELIGIBLE DEFERRED COMPENSATION PLAN UN DER § 457(F) OF THE INTERNAL 24
REVENUE CODE. 25
(b) Subject to subsections (C) AND (d) [and (e) ] of this section, to determine 26
Maryland adjusted gross income, if, on the last day of the taxable year, a resident is at least 27
65 years old or is totally disabled or the resident’s spouse is totally disabled, or the resident 28
is at least 55 years old and is a retired forest ranger, park ranger, or wildlife ranger of the 29
United States, the State, or a political subdivision of the State, an amount is subtracted 30
from federal adjusted gross income equal to [the lesser of]: 31
HOUSE BILL 707 3
(1) [the cumulative or total annuity, pension, or endowment income from 1
an employee retirement system ] 30% OF THE TOTAL INCOME FROM A QUALIFIED 2
RETIREMENT PLAN included in federal adjusted gross income FOR A TAXABLE YEAR 3
BEGINNING AFTER DECEMBER 31, 2025, BUT BEFORE JANUARY 1, 2027; [or 4
(2) the maximum annual benefit under the Social Security Act computed 5
under subsection (c) of this section, less any payment received as old age, survivors, or 6
disability benefits under the Social Security Act, the Railroad Retirement Act, or both.] 7
(2) 60% OF THE TOTAL INCOME FROM A QUALIFIED RET IREMENT 8
PLAN INCLUDED IN FED ERAL ADJUSTED GROSS INCOME FOR A TAXABLE YEAR 9
BEGINNING AFTER DECEMBER 31, 2026, BUT BEFORE JANUARY 1, 2028; AND 10
(3) 100% OF THE TOTAL INCOME FROM A QUALIFIED RET IREMENT 11
PLAN INCLUDED IN FED ERAL ADJUSTED GROSS INCOME FOR A TAXABLE YEAR 12
BEGINNING AFTER DECEMBER 31, 2027. 13
[(c) For purposes of subsection (b)(2) of this section, the Comptroller: 14
(1) shall determine the maximum annual benefit under the Social Security 15
Act allowed for an individual who retired at age 65 for the prior calendar year; and 16
(2) may allow the subtraction to the nearest $100. 17
(d) (1) Military retirement income that is included in the sub traction under § 18
10–207(q) of this subtitle may not be taken into account for purposes of the subtraction 19
under this section. 20
(2) Public safety employee retirement income that is included in the 21
subtraction under § 10–207(mm) of this subtitle may not be taken into account for purposes 22
of the subtraction under this section.] 23
(C) ANY INCOME THAT IS IN CLUDED IN THE SUBTRA CTIONS UNDER § 24
10–207 OF THIS SUBTITLE MAY NOT BE TAKEN INTO AC COUNT FOR THE PURPOSES 25
OF THE SUBTRACTION UNDER THIS SECTION. 26
[(e)] (D) In the case of a retired forest ranger, park ranger, or wildlife ranger of 27
the United States, the State, or a political subdivision of the State, the amount included 28
under subsection [(b)(1)] (B) of this section is limited to the first $15,000 of retirem ent 29
income that is attributable to the resident’s employment as a forest ranger, park ranger, or 30
wildlife ranger of the United States, the State, or a political subdivision of the State unless: 31
(1) the resident is at least 65 years old or is totally disabled; or 32
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(2) the resident’s spouse is totally disabled. 1
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect July 2
1, 2026, and shall be applicable to all taxable years beginning after December 31, 2025. 3