Ocity Logo ocity
Official Tax Guide

District of Columbia Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to District of Columbia state taxes. Income tax (4% - 10.75%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

State Tax Guide 2025: District of Columbia

Moving to the District of Columbia offers a unique urban living experience, distinct from any state. As you plan your relocation, understanding the local tax structure is crucial for your financial planning. This guide provides an overview of the key taxes you will encounter as a DC resident.

Note: As the District of Columbia is a federal district and not a state, its tax laws are distinct and enacted by the DC Council.

1. Income Tax

The District of Columbia uses a progressive income tax system with multiple tax brackets. Your tax rate will depend on your taxable income and filing status.

  • Tax Structure: Progressive (marginal tax rates).

  • Taxable Income: DC taxable income is generally based on your federal Adjusted Gross Income (AGI), with specific local adjustments.

  • 2025 Tax Brackets (Estimated):

    • Note: While specific brackets for 2025 are subject to annual adjustment, the rate structure typically remains consistent. The following represents the standard DC tax brackets based on historical data:
    • 4% on income up to $10,000 (Single) / $20,000 (Married Joint)
    • 6% on income over $10,000 up to $40,000 (Single) / $20,000 up to $80,000 (Married Joint)
    • 6.5% on income over $40,000 up to $60,000 (Single) / $80,000 up to $120,000 (Married Joint)
    • 8.5% on income over $60,000 up to $250,000 (Single) / $120,000 up to $500,000 (Married Joint)
    • 9.75% on income over $250,000 up to $500,000 (Single) / $500,000 up to $1,000,000 (Married Joint)
    • 10.75% on income over $500,000 (Single) / $1,000,000 (Married Joint)

  • Filing: Residents must file a D-40 form annually. DC also requires a "First-Time Homebuyer Savings Account" deduction for eligible residents.

2. Sales Tax

The District of Columbia imposes a sales tax on the retail sale of tangible personal property and certain services.

  • State Rate: 6.0%
  • Local Taxes: Unlike many states where local jurisdictions add separate sales taxes, DCā€™s sales tax is consolidated. The 6% rate applies uniformly across the District.
  • Additional Taxes:
    • Hotel Occupancy Tax: A 14.95% tax applies to hotel stays.
    • Alcohol Tax: Specific taxes apply to the sale of alcoholic beverages (e.g., 10% to 14% on liquor sales, depending on the venue).
    • Exemptions: Groceries, prescription drugs, and certain clothing items are generally exempt from the sales tax.

3. Property Tax

Property taxes in the District of Columbia are administered by the Office of Tax and Revenue (OTR).

  • Overview: DC property taxes are based on the assessed value of real property. The tax rate is applied per $100 of assessed value.
  • Tax Rate: The standard commercial and residential property tax rate is $0.85 per $100 of assessed value.
  • Homestead Deduction: Homeowners can benefit from the Homestead Deduction, which reduces the taxable assessment of their primary residence by up to $78,700 (subject to annual adjustment).
  • Tax Cap: There is a 10% cap on the annual increase in the assessed value of residential property for tax calculation purposes, provided the property is owner-occupied.

4. Other Taxes

Beyond income, sales, and property taxes, residents should be aware of the following:

  • Gas Tax: DC imposes a tax on gasoline. As of 2025, the combined state and federal tax is roughly $0.61 per gallon. Note: DC gas prices are generally higher than the national average due to these taxes and location.
  • Sin Taxes:
    • Tobacco: High excise taxes apply to cigarettes ($4.50 per pack) and other tobacco products.
    • Sugary Drinks: A 1.5 cent-per-ounce tax applies to sweetened beverages (soda tax).
  • Inheritance/Estate Tax: DC has a separate estate tax with a lower exemption threshold than the federal government. As of 2025, the exemption is estimated to be around $4.5 million. Estates exceeding this amount may be subject to tax rates ranging from 11.2% to 18%.

5. Retiree Taxes

For retirees moving to DC, understanding how retirement income is taxed is vital.

  • Social Security: Social Security benefits are not taxed by the District of Columbia.
  • Pensions and IRA Withdrawals: Pension income and distributions from 401(k)s or IRAs are taxable at the standard DC income tax rates (brackets 4%ā€“10.75%).
  • Senior Citizen/Renter Deduction: DC offers aSenior Citizen and Disabled Persons Property Tax Credit, which can provide relief for qualifying homeowners. Renters may also be eligible for a rent deduction on their income tax return.

6. Comparison to Neighbors

When comparing DC to its neighboring jurisdictions, Virginia and Maryland, the tax structures differ significantly:

  • Virginia: Has a flat income tax rate (currently 5.75% for 2025), which is lower than DC's top marginal rate. Virginia sales tax is generally lower (4.3% - 6%), and local jurisdictions can add additional sales tax.
  • Maryland: Uses a progressive income tax system (2% - 5.75%), with the top rate significantly lower than DC's 10.75%. Maryland also allows counties to impose additional local income taxes (piggyback taxes), which DC does not.
  • DC Advantage: While DC lacks a "piggyback" local income tax, its top marginal income tax rate is the highest in the region. However, DC does not tax groceries (unlike Virginia, which does, though with a reduced rate) and offers specific deductions for homeowners and renters that may offset costs.

Disclaimer: Tax laws change frequently. The information provided in this guide is for general informational purposes only and is based on data available for 2025. It is not a substitute for professional tax advice. Consult a CPA or tax professional to discuss your specific financial situation.