Maryland Form MW507P: Retirement Withholding Amount and Filing

Maryland Form MW507P is the one-page request you give a pension plan, annuity provider, or sick-pay payer to have Maryland state and local income tax withheld from each payment before it reaches you. The withholding is voluntary. Maryland does not require it on most retirement distributions, but setting it up spares you a surprise bill, and possible penalties, at tax time.¹ The form asks only for your identifying information and a whole-dollar amount. The work is in choosing that amount.

Who the Form Is For

Any Maryland resident receiving an annuity, sick pay, or a retirement distribution can file MW507P. There is one boundary worth knowing before you start: an annuity has to be payable over a period longer than one year. A lump-sum payout does not qualify for voluntary withholding through this form.¹ Typical filers are retirees drawing a monthly pension, beneficiaries of annuity contracts, and employees collecting sick pay under an employer plan.

Filling Out MW507P

You can download the current form from the Comptroller of Maryland at marylandcomptroller.gov. It fits on one page and asks for:

Your legal name as it appears on your tax return.
Your Social Security number, which the payer uses to report the withholding.
Your Maryland home address, including city, state, and ZIP code.
Line A: the contract, claim, or identification number your payer uses for your account.
Line B: the whole-dollar amount to withhold from each payment. The minimum is $5 per month for annuities and retirement distributions, or $2 per daily payment for sick pay.
Your signature and date. Without both, the form is not valid.¹

There is no filing-status line, no exemption box, no percentage election. You are telling the payer how many dollars to take out of each check.

Choosing the Dollar Amount on Line B

Because Line B is a flat dollar figure, you need to estimate your Maryland tax for the year and divide it across your payments. A few pieces feed into that estimate.

State Rates

Maryland’s rates are graduated. They start at 2% on the first $1,000 of taxable income and climb through several brackets, reaching 5.75% for single filers with income between $250,001 and $500,000. Joint filers hit the 5.75% bracket at $300,001.² Retirees usually land in the middle brackets, but rental income, part-time work, or investment gains can push your effective rate higher than expected.

Local Tax

Every Maryland county and Baltimore City adds a local income tax. For 2026 the rates run from 2.25% in Worcester County to 3.30% in Dorchester and Kent Counties, with most jurisdictions clustered around 3.20%.³ Your Line B figure should cover both state and local tax.

The Pension Exclusion

If you are at least 65, are totally disabled, or have a totally disabled spouse, Maryland lets you subtract qualifying pension and annuity income from your federal adjusted gross income for state tax purposes. The maximum exclusion is tied to the highest annual Social Security benefit ($41,200 for tax year 2025) and is reduced dollar-for-dollar by any Social Security or Railroad Retirement benefits you receive.⁴ After the exclusion and Social Security offset, some retirees have little taxable Maryland income left, which means a small Line B, or none.

A Practical Shortcut

The form’s instructions suggest picking an amount that keeps your year-end balance to $500 or less, which is the threshold that would otherwise push you into filing estimated payments on Form PV.¹ Pull last year’s Maryland return. Take your total state and local tax, subtract withholding from any other source (a spouse’s W-2, for example), divide the remainder by the number of pension payments you get each year, and round up. If your income is steady, that figure lands close enough.

Where to Send It

Send the completed form to your payer: the pension administrator, the insurance company, or the employer running your sick-pay plan. Do not mail it to the Comptroller. The state does not process individual pension and annuity withholding requests.¹

Many administrators accept an uploaded PDF through their benefits portal. If yours does not, mail the signed original to the benefits or payroll office and keep a copy. Check the next payment or two to confirm the withholding started. Administrators sometimes need a billing cycle to process a new form.

Changing or Stopping Withholding

The form stays in effect until you replace or cancel it. There is no annual renewal.¹ To change the amount, file a new MW507P; the new form replaces the old one. To stop withholding entirely, send your payer a short written notice with your name, account number, and request to end Maryland withholding. Before you cancel, make sure your Maryland liability really is close to zero, or plan to cover it with quarterly estimated payments instead.

Events that usually call for a new form:

Marriage or divorce, which shifts your brackets.
A move across county lines, since local rates run from 2.25% to 3.30%.³
A new income source such as part-time work, Social Security, or investment sales.
A cost-of-living adjustment to your pension, which means the same flat amount now covers a smaller share of the tax.
Turning 65 and becoming eligible for the pension exclusion, which can drop your Maryland tax significantly.

Federal Withholding Is a Different Form

MW507P covers Maryland state and local tax only. Federal withholding on retirement payments is handled through the IRS. For periodic pension payments spread over more than a year, use Form W-4P. For nonperiodic distributions, such as a one-time IRA withdrawal, use Form W-4R; the default federal rate on nonperiodic payments is 10%, and you can elect anywhere from 0% to 100%.⁵

One reason to use withholding rather than quarterly estimated payments: both the IRS and Maryland treat withheld tax as if it were paid evenly across the year, even if you only started withholding in October. Estimated payments are graded quarter by quarter, so an underpayment early in the year creates a penalty you cannot fully undo by overpaying later.

If You Skip Withholding

Nothing happens right away, but the bill hits when you file. Maryland’s late-payment penalty runs up to 25% of the tax owed.⁶ Interest also accrues at a rate the Comptroller resets each year (11.4825% for 2025), so check the current figure on the Comptroller’s site.⁷

At year end, your payer issues a Form 1099-R showing total gross payments and total Maryland tax withheld. You report both on your Maryland return, and the withheld amount credits against your liability the same way employer withholding does on a W-2.¹

1
Comptroller of Maryland. MW507P Maryland Income Tax Withholding for Annuity, Sick Pay and Retirement Distributions
2
Comptroller of Maryland. Maryland Income Tax Rates and Brackets
3
Maryland Department of Legislative Services. Local Tax Rates
4
Comptroller of Maryland. Tax Guidance – Maryland Pension Exclusion
5
Internal Revenue Service. Form W-4R Withholding Certificate for Nonperiodic Payments and Eligible Rollover Distributions (2026)
6
Comptroller of Maryland. Tax Guidance – Penalty and Interest Charges
7
Comptroller of Maryland. Compliance FAQs