The Short Answer
Active-duty pay is taxed as Maryland income (state plus local rates), but members with total military pay under $30,000 may subtract up to $15,000 of pay earned outside the U.S. Your base pay is set by the federal pay table — identical to every other state for your rank and years of service. What actually changes in Maryland is your BAH (averaging $2,100/mo without dependents and $2,500/mo with dependents) and how Maryland treats the taxable portion of your pay.
State tax status: ~ PARTIAL EXEMPT
2026 Worked Example — E-5, 6 Years, With Dependents in Maryland
Here is how the math actually lands for a mid-career enlisted member stationed in Maryland, built the way I read my own LES. Base pay and BAS are federal; the Maryland BAH figure is the state average.
| Monthly line item | Amount | Taxable? |
|---|---|---|
| Base pay (E-5, over 6 yrs) | $3,874 | Yes (federal + state) |
| BAH with dependents (Maryland avg) | $2,500 | No — tax-free |
| BAS (enlisted) | $476.95 | No — tax-free |
| Gross monthly entitlements | $6,850.95 | — |
| Taxable income (base pay only) | $3,874 | — |
| Est. Maryland state income tax | varies — see notes | — |
Only the $3,874 of base pay is taxable — the $2,976.95 of BAH + BAS is completely tax-free. Run your exact rank, ZIP, and dependency status in the Military Pay Calculator for a precise estimate.
How Maryland Taxes Each Type of Military Pay
Active-Duty Base Pay
Active-duty pay is taxed as Maryland income (state plus local rates), but members with total military pay under $30,000 may subtract up to $15,000 of pay earned outside the U.S.
Guard & Reserve Drill Pay
Maryland Guard and Reserve drill pay is generally taxable; verify subtraction eligibility with the Comptroller.
Military Retirement Pay
Military retirement is partially exempt: deduct up to $12,500 if under 55, and up to $20,000 if 55 or older.
VA Disability Compensation
VA disability compensation is exempt federally and is not taxed by Maryland.
SCRA & Residency in Maryland
A nonresident servicemember at Fort Meade or Andrews owes no Maryland tax on military pay under SCRA, and a spouse may claim MSRRA for in-state wages.
This is the single most misunderstood rule in military pay. Your home of record / state of legal residence — not your duty station — generally determines who can tax your military pay. Changing it is a deliberate act, not something that happens automatically when you PCS.
Major Military Installations in Maryland
- Naval Air Station Patuxent River
- Fort Meade
- Joint Base Andrews
- Aberdeen Proving Ground
BAH is set by the Military Housing Area covering your duty ZIP. Verify your exact rate at the official DoD BAH lookup.
Official Sources
FAQ — Military Pay in Maryland
Does Maryland tax my military base pay?
Active-duty pay is taxed as Maryland income (state plus local rates), but members with total military pay under $30,000 may subtract up to $15,000 of pay earned outside the U.S.
Is my BAH taxed in Maryland?
No. BAH is federally tax-free and is never counted as income for Maryland state income tax, regardless of how Maryland treats base pay.
Does Maryland tax military retirement pay?
Military retirement is partially exempt: deduct up to $12,500 if under 55, and up to $20,000 if 55 or older.
I'm stationed in Maryland but my home of record is elsewhere — who taxes me?
A nonresident servicemember at Fort Meade or Andrews owes no Maryland tax on military pay under SCRA, and a spouse may claim MSRRA for in-state wages.