Washington, D.C.
has a graduated individual income tax rate, ranging from 4% on the first $10,000 of taxable income up to 10.75% on income above $60,000.
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D.C.
residents must file a tax return if they were a resident during the tax year, maintained a home in the district for at least 183 days, or are a member of the armed forces with D.C.
as their home of record.
D.C.
offers various deductions and credits, including a credit for child and dependent care expenses and a homeowner/renter property tax credit.
The district's property tax rate for residential property is 85 cents per $100 of assessed value, and D.C.
imposes an estate tax on estates valued at over $4.25 million.
Compared to neighboring states, D.C.
has a significantly higher top individual income tax rate of 10.75% versus Maryland and Virginia's top rate of 5.75%.
D.C.'s corporate income tax rate is 8.25%, which is higher than the federal corporate tax rate of 21%.
The district's sales tax rate is 6%, which is higher than the sales tax rates in Maryland (6%) and Virginia (4.3%-5.3%).
D.C.
residents pay both federal income taxes and D.C.
income taxes, resulting in a higher overall tax burden compared to many other parts of the country.
D.C.
does not have a local or state-level earned income tax credit, unlike the federal earned income tax credit and similar credits offered in many states.
The D.C.
tax code is regularly updated, with the most recent changes coming in October 2021, including an increase in the cigarette tax.
D.C.
residents can claim a credit for income taxes paid to other states, helping to mitigate the impact of the district's high income tax rates.
The District of Columbia's tax code is more complex than many state tax systems, with a larger number of tax brackets and various deductions and credits to navigate.
Despite its high tax rates, D.C.
residents enjoy various public services and amenities, including a robust public transportation system, extensive parks and cultural institutions, and a vibrant local economy.
The district's income tax revenue is a significant source of funding for the local government, accounting for over a third of the district's total revenue.
D.C.
residents who work in Virginia or Maryland may also be subject to those states' income taxes, leading to an even higher overall tax burden.
The district's tax code is designed to be progressive, with higher-income residents paying a larger share of their income in taxes.
D.C.
has a unique tax status as the nation's capital, with the federal government playing a significant role in the district's fiscal and economic policies.
The district's income tax rates and brackets are adjusted annually for inflation, ensuring that the tax burden keeps pace with changes in the cost of living.
D.C.
residents who work in the private sector generally pay higher income taxes compared to those employed by the federal government, which is exempt from the district's income tax.
The district's income tax revenues are used to fund a wide range of public services, including education, public safety, infrastructure, and social services.