Active-duty and reserve pay
Military pay is taxed, but members earning less than $30,000 in military pay can subtract up to $15,000 earned outside U.S. states and possessions.
An E-5 with over 6 years of service earns $49,320 a year in basic pay, and an O-3 with over 6 years $92,844. In Maryland, that basic pay is generally part of state taxable income, apart from the exemptions above. Housing and food allowances are never taxed by any state.
Military retired pay
Up to $12,500 of military retired pay can be subtracted below age 55 and up to $20,000 from age 55.
Your state of legal residence decides
Military pay is taxed by your state of legal residence, usually the state you lived in when you joined or one you later adopted by changing your records, not by the state where you are stationed. This comes from the Servicemembers Civil Relief Act. Spouses can choose to use the member's state of legal residence for their own income too.
See your total pay with state tax
Questions
Does Maryland tax military pay?
Maryland taxes most military pay, with some exemptions. Military pay is taxed, but members earning less than $30,000 in military pay can subtract up to $15,000 earned outside U.S. states and possessions.
Does Maryland tax military retirement pay?
Up to $12,500 of military retired pay can be subtracted below age 55 and up to $20,000 from age 55.
Is BAH taxed in Maryland?
No. BAH and BAS are not taxable income for federal or state tax in any state.
Which state taxes me if I am stationed in Maryland?
Under the Servicemembers Civil Relief Act, your military pay is taxed only by your state of legal residence, not the state where you are stationed. If Maryland is not your legal residence, Maryland does not tax your military pay.