Where is Deduction of Military Retirement for Maryland State tax?.

The deduction is on the MD 502SU. You create the deduction in the federal section when you entered your 1099R.

The questions and screens vary a bit by program but you can get the idea with these steps:

1. No to IRA
2. No to PSO
3. Select MD
4. Select active or reserve military retirement
5. From a Non-Qualified Plan
6. Continue

Form 502SU, Subtractions from Income states:

• Military Retirement Income. Individuals at least 55 years of age on the last day of the taxable year may claim up to $20,000 of military retirement income, including death benefits, received in the taxable year. 
• Individuals under the age of 55 on the last day of the taxable year may claim up to $12,500 of military retirement income received in the taxable year.