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HB 857

Income Tax - Subtraction Modification for Military Retirement Income - Individuals Under the Age of 55

2026 Regular Session Introduced by Nick Allen and 24 co-sponsors

HB 857 removes the age 55 requirement for Maryland military retirement income tax exclusion, extending the benefit to all career military retirees regardless of age.

Hearing 2/19 at 1:00 p.m.
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Bill Summary · HB 857

Legislative bill overview

HB 857 would modify Maryland's income tax code to allow individuals under age 55 to exclude military retirement income from their state taxable income. Currently, Maryland only permits this subtraction for taxpayers age 55 and older. This bill would expand the tax benefit to younger military retirees regardless of their age.

Why is this important

Military retirement is relatively uncommon before age 55, as most service members retire after 20+ years of service around age 40-45. Expanding this tax benefit could improve financial outcomes for career military personnel and potentially make Maryland more competitive in retaining retired military residents. However, this represents foregone state tax revenue that would need to be offset or absorbed into the budget.

Potential points of contention

  • Revenue impact: Eliminating the age 55 threshold removes a significant revenue-limiting factor; the fiscal cost depends on how many younger retirees would benefit
  • Fairness considerations: Critics may question why military retirement income receives preferential treatment compared to other pension income, or whether the benefit should be means-tested
  • Budget implications: During tight budget cycles, expanding tax exemptions becomes more controversial as it reduces available funds for education, infrastructure, and services

Compiled from official sources — confirm details with the bill’s official record.

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