Annuity Rates for Maryland
Maryland’s combined state-plus-county income tax can look alarming on paper, rates as high as 8.95% in some jurisdictions. But for retirees 65 and older, Maryland’s retirement income subtraction changes the calculation significantly. A married couple can exclude up to $72,400 of retirement income from state taxable income. For many Maryland annuity buyers, the effective state tax on distributions is far lower than the headline rate suggests.
George and Helen are both 67, both retired federal employees in Annapolis, with $450,000 from a FERS pension lump sum to deploy. Their goal is guaranteed income growth over the next 7–10 years before they begin drawing distributions. At their combined $72,400 retirement income exclusion, a significant portion of their annuity distributions could be fully sheltered from Maryland state income tax. The key is understanding exactly how the exclusion applies to their situation.
Best Annuity Rates in Maryland: 2026 Rate Table
The rates below reflect top offers from A-rated carriers available to Maryland residents as of March 2026. These are multi-year guaranteed annuity rates, the credited rate is locked in for the full term.
Rates shown are for informational purposes only and subject to change without notice. Products marked SI use simple interest, effective compound yield is lower than the stated rate. Minimum premiums shown are for non-qualified (after-tax) funds. Always verify current rates with a licensed annuity professional before purchasing.
For a free quote specific to your premium amount and county, connect with a licensed Maryland annuity agent through My Annuity Store. Rates quoted at application are the rates you receive for the full term, there are no rate resets during the contract period.
How Maryland Regulations Affect Your Annuity Rate
Maryland charges a premium tax of 2.0% on annuity premiums, in line with the national average. This cost is built into the rates carriers offer Maryland residents, it doesn’t dramatically disadvantage Maryland rates, but it does mean the state’s offerings track with mid-range states rather than the top tier.
The Maryland Insurance Administration (MIA) regulates all annuity products and agent licensing in the state. The MIA is one of the more active state regulators, it issues consumer alerts regularly and has a track record of taking action against unsuitable sales practices. That level of regulatory attention benefits buyers: agents selling in Maryland know they’re being watched.
Maryland follows the NAIC suitability model regulation. Before recommending an annuity, your agent is required to analyze your income, assets, financial objectives, and time horizon and document how the product fits. This isn’t just paperwork, it’s a layer of consumer protection that has filtered out some of the worst annuity sales practices.
Maryland annuity contracts include a 10-day free look period. After receiving the contract, you have 10 days to review it in full and cancel for a complete return of premium. George and Helen should use that window to independently verify that the contract terms, rate, surrender schedule, beneficiary designations, match exactly what was quoted and agreed upon.
Maryland Life and Health Insurance Guaranty Corporation
The Maryland Life and Health Insurance Guaranty Corporation (MLHIGC) is Maryland’s insolvency backstop for annuity owners. Coverage applies up to $250,000 in present value per annuity owner, per insolvent insurer.
George and Helen are deploying $450,000. That’s $200,000 above the single-carrier coverage limit. The correct approach: split the premium across two A-rated carriers, $225,000 with Carrier A and $225,000 with Carrier B. Each contract is separately covered up to $250,000, and both amounts fall within the limit. Both contracts are fully protected.
Maryland’s guaranty corporation does not cover all contract benefits in every scenario, it covers the present value of annuity benefits up to the limit. The protection is meaningful, but it should not be the primary basis for carrier selection. An A++ rated carrier with 100+ years of history and a strong capital ratio is not a company that typically winds up in insolvency proceedings. Start with the carrier’s financial strength, then use the split-carrier strategy as a secondary protection layer.
Our guide to state guaranty associations provides a full explanation of how coverage works and how to confirm your carrier’s status within the system.
Annuity Tax Treatment in Maryland
Maryland imposes a state income tax ranging from 2% to 5.75%, plus a separate county income tax that varies by jurisdiction, typically between 2.25% and 3.20%. In Montgomery County, the county rate is 3.20%. In Anne Arundel County (where Annapolis sits), the county rate is 2.81%. Combined rates in some counties can approach 8.95% at the highest marginal bracket.
However, Maryland offers a significant benefit for retirement income: residents aged 65 and older can subtract up to $36,200 per person of pension and retirement income from Maryland taxable income. A married couple where both spouses are 65+ can exclude up to $72,400 combined. This applies to qualified retirement income, including distributions from annuities funded through IRA or 401(k) rollovers.
Here’s what that means for George and Helen. Their FERS lump sum rolls into a qualified annuity. They begin withdrawals at age 73 for RMD purposes. If their combined required distributions are $65,000 per year, they can exclude $72,400, meaning the full $65,000 in annuity income is sheltered from Maryland state and county income tax in that year. They pay federal tax, but nothing to Maryland. The combined tax picture is far friendlier than the headline rates suggest.
The subtraction is income-sensitive at higher levels and has a phase-out above certain income thresholds, consult a Maryland tax advisor to confirm the exact exclusion amount for your specific income level. For couples with substantial other income, a portion of the exclusion may be reduced. For those who have moderate income from Social Security (which Maryland also exempts for most retirees) and the annuity, the exclusion typically covers all or most of the annuity distributions.
Non-qualified annuities are subject to the exclusion ratio, only the earnings portion of each distribution is taxable. The principal return is excluded from taxable income at both the federal and state levels.
How to Buy an Annuity in Maryland: Step by Step
- Assess your income needs and time horizon. George and Helen don’t need this money for at least 7 years. A 7-year MYGA at 5.75% grows $450,000 to roughly $670,000, and the tax deferral means no annual income tax drag during the accumulation phase. If you have a shorter timeline or expect to need partial distributions earlier, consider a shorter term or a ladder of two contracts with staggered maturities.
- Account for Maryland’s county tax in your projections. Before choosing a withdrawal amount, know your county’s income tax rate. In Anne Arundel County, the state-plus-county combined rate at the top bracket reaches 8.56%. Factor that into your net income calculation, though the retirement income subtraction may reduce or eliminate the Maryland portion once you confirm eligibility.
- Structure your split to stay within guaranteed limits. With $450,000 to place, split across two carriers with $225,000 each. This keeps both contracts inside Maryland’s $250,000 coverage limit. When comparing rates for the split, make sure each carrier independently qualifies, both should be A-rated. Rate differences between top carriers are typically within 0.10%–0.25%, a small price for full coverage on both positions.
- Initiate the FERS rollover as a direct transfer. A direct trustee-to-trustee rollover from a FERS lump sum to an IRA annuity is tax-free at the time of transfer. The insurer will provide rollover instructions; your former agency’s HR office handles the distribution to the carrier. Never take personal possession of a rollover check if you can avoid it, the 60-day rollover rule creates unnecessary timing pressure and 20% withholding risk.
- Review both contracts during the free look period. Maryland’s 10-day free look applies to each contract separately. When both contracts arrive, verify the credited rate, term, surrender charge schedule, and beneficiary on each. To get a free quote and connect with a licensed Maryland agent, start at My Annuity Store. See our complete guide to buying an annuity for a detailed walkthrough of the process.
Frequently Asked Questions About Annuities in Maryland
How does Maryland’s retirement income subtraction affect annuity withdrawals?
Maryland residents age 65 and older can subtract up to $36,200 per person ($72,400 for a married couple both 65+) of pension and retirement income from Maryland taxable income. Qualifying annuity distributions, particularly from IRA or 401(k)-funded annuities, count toward this exclusion. Many retirees with moderate income can shelter all or most of their annuity distributions from Maryland state and county taxes. The exclusion is income-sensitive at higher income levels, so consult a Maryland tax advisor to confirm your specific eligibility.
What is the county income tax impact on my annuity income in Maryland?
Maryland county income tax rates range from 2.25% to 3.20%, added on top of the state income tax. Anne Arundel County charges 2.81%; Montgomery County charges 3.20%. However, if your annuity distributions are covered by the retirement income subtraction, the county tax is also reduced or eliminated on that income, the subtraction applies to both state and county income tax calculations.
What is the guaranty association coverage limit in Maryland?
Maryland’s guaranty corporation covers annuity contracts up to $250,000 per annuity owner, per insolvent insurer. For premiums over $250,000, split the investment across two A-rated carriers with amounts below the coverage limit at each carrier.
Should George and Helen split their $450,000 across two annuity carriers?
Yes. $450,000 with a single carrier exceeds Maryland’s $250,000 guaranty limit by $200,000. By placing $225,000 with two separate A-rated carriers, each contract is independently protected in full. The rate difference between two A-rated carriers is typically under 0.15%, making the split a straightforward decision with minimal cost.
Compare Annuity Rates in Other Northeast States
Shopping for the best rate? Guaranty association limits, premium taxes, and available carriers vary by state. Compare rates in nearby states to find the best fit for your retirement plan.
- Best Annuity Rates in New York
- Best Annuity Rates in Massachusetts
- Best Annuity Rates in Connecticut
- Best Annuity Rates in Rhode Island
- Best Annuity Rates in Washington D.C.
- View All 50 State Rate Pages
You can also compare our current best fixed annuity rates or explore top 5-year MYGA rates nationwide.
