Washington D.C. Tax Calculator
D.C. Income Tax: Seven-Bracket Graduated System
Washington D.C. has a seven-bracket graduated income tax with rates ranging from 4% to 10.75%. The top rate applies to income over $1 million and is among the highest in the nation, exceeding most states' top rates. Here are the current brackets:
| Taxable Income | Tax Rate |
|---|---|
| $0 - $10,000 | 4.0% |
| $10,001 - $40,000 | 6.0% |
| $40,001 - $60,000 | 6.5% |
| $60,001 - $250,000 | 8.5% |
| $250,001 - $500,000 | 9.25% |
| $500,001 - $1,000,000 | 9.75% |
| Over $1,000,000 | 10.75% |
D.C. uses a standard deduction of $14,600 for single filers and $29,200 for married filing jointly (conforming to federal amounts). Itemized deductions are available but are phased out for higher-income filers. The District offers an Earned Income Tax Credit (EITC) worth 70% of the federal EITC — one of the most generous local EITC supplements in the country, benefiting lower-income working families significantly.
A key fiscal challenge for D.C. is that it cannot tax non-resident commuters. Approximately 70% of D.C.'s workforce lives in Maryland or Virginia but works in the District. Unlike cities like New York (which taxes non-resident workers) or Philadelphia, D.C. lacks the Congressional authorization to impose a commuter tax. This costs D.C. an estimated $2.5 billion annually in forgone revenue, a unique burden for any American jurisdiction.
D.C. Sales Tax
D.C. levies a 6% general sales tax, but applies higher rates to specific categories that reflect the District's unique economy:
- Restaurant meals and takeout: 10%
- Alcohol for on-premises consumption: 10.25%
- Parking: 18%
- Hotel rooms: 14.95%
- Rideshare (Uber/Lyft): 6%
- Soft drinks: 8%
Groceries, prescription drugs, and non-prescription medicines are exempt from D.C. sales tax. The District does not allow any local additions to the sales tax rate. D.C.'s higher rates on dining, hotels, and parking are designed to capture revenue from tourists and non-resident visitors who use District services but don't pay D.C. income tax. The restaurant tax alone generates hundreds of millions annually given D.C.'s extensive dining scene.
D.C. Property Tax
D.C.'s effective property tax rate is approximately 0.56%, among the lowest in the nation. The statutory residential rate is $0.85 per $100 of assessed value (0.85%), but the effective rate is lower due to the generous $87,500 homestead deduction available to all owner-occupied residential properties. Commercial and vacant property faces higher rates.
Despite the low effective rate, property tax bills can be substantial due to D.C.'s extremely high property values. The median home sale price in D.C. exceeds $650,000, and many neighborhoods average well over $1 million. A home assessed at $800,000 would owe approximately $6,060 annually after the homestead deduction: ($800,000 - $87,500) × 0.85% = $6,056.
D.C. offers additional property tax relief programs: a senior/disabled citizen deduction of 50% of assessed value (for incomes under $145,750), a tax deferral program for seniors, and a homestead-occupant credit. The District also has a "Schedule H" property tax credit on income tax returns for low-income homeowners and renters, providing up to $1,200 annually.
D.C.'s Unique Tax Position
Washington D.C. occupies a unique position in American tax policy. As a federal district rather than a state, D.C. faces constraints that no state deals with:
- No commuter tax authority: D.C. provides services to 700,000+ daily commuters but cannot tax their income. This costs approximately $2.5 billion annually, forcing higher rates on D.C. residents.
- Congressional budget oversight: D.C.'s budget technically requires Congressional approval, which has historically been used to block local tax and spending priorities.
- Federal property exemption: Approximately 42% of D.C.'s land is occupied by federal government property that is exempt from property tax. This massively reduces the property tax base.
- Height restrictions: Building height limits (no taller than the Capitol) constrain development density, limiting the tax base from commercial real estate.
These constraints explain why D.C. has some of the highest income tax rates in the nation — the District has fewer revenue tools than any state and must compensate with higher rates on its resident tax base. The push for D.C. statehood is partly motivated by the desire for greater fiscal autonomy.
D.C. Estate Tax
D.C. imposes an estate tax with an exemption of $4,528,800 (indexed for inflation), which is significantly lower than the federal exemption of $13.61 million. Estates above the threshold are taxed at graduated rates from 11.2% to 16%. This is a "cliff" tax — once an estate exceeds the exemption threshold by even $1, the entire amount above the threshold is taxed. D.C. does not have a separate inheritance tax. Estate planning is critical for D.C. residents with significant assets, particularly given the high real estate values that can push estates above the threshold.
D.C. vs. Neighboring Jurisdictions
- Virginia — Virginia has a graduated income tax topping at 5.75%. Sales tax is 5.3% (6% in Northern Virginia). Property tax varies by county (Fairfax 1.11%, Arlington 1.03%). For most earners, Virginia is significantly cheaper on income tax. Many D.C. workers choose to live in Virginia suburbs for tax savings.
- Maryland — Maryland has a graduated income tax up to 5.75% plus county taxes of 2.25%-3.2%, bringing the combined top rate to about 8.95%. Sales tax is 6%. Property tax varies by county (Montgomery 0.96%, Prince George's 1.35%). Maryland is cheaper for most earners but county taxes narrow the gap.
- Federal workers — About 30% of D.C. residents work for the federal government. A federal employee earning $120,000 in D.C. pays roughly $7,400 in D.C. income tax. The same employee living in Virginia would pay about $5,200 in state tax, or in Maryland about $6,800 (state + county). Annual savings of $600-$2,200 by living outside D.C. drive housing decisions for thousands of federal workers.