Washington DC taxes income at 4% to 10.75% across 7 brackets. The 10.75% top rate kicks in at $1,000,000+ — higher than Maryland (5.75%) and Virginia (5.75%). At $100,000 income, a DC resident pays approximately $5,700 in DC income tax (effective rate ~5.7%). DC also has an estate tax starting at $4 million — much lower than the $13.6M federal exemption — making DC one of the least estate-tax-friendly jurisdictions for residents with assets above $4M.
$12,950 (single) — matches federal standard deduction; itemising allowed
Estate Tax
DC estate tax starts at $4,000,000 — rates from 11.2% to 16%; no portability between spouses
Capital Gains Tax
Taxed as ordinary income — DC 4%–10.75%; no separate capital gains rate
Sales Tax
6% general sales tax; restaurants 10%; alcohol 10.25%; parking 18%
Property Tax
~0.85% effective residential rate; Homestead Exemption reduces assessed value by $84,000
Introduction
Washington DC has the highest top marginal income tax rate in the DMV (DC-Maryland-Virginia) metro area — 10.75% on income above $1,000,000 — and one of the most aggressive estate taxes in the country, starting at just $4 million. For most middle-income earners, the effective rate is more moderate, but DC's bracket structure means the tax burden climbs quickly for high earners.
DC residents pay only DC income tax — they do not pay Maryland or Virginia state income tax even if they commute across the border for work (DC residents working in Maryland still file only a DC return as their home jurisdiction). However, DC non-residents working in DC (e.g. Maryland and Virginia residents employed in DC) pay DC income tax only on DC-source wages, not DC residents' local tax.
Section 01
DC Income Tax Brackets 2026: What You Actually Pay
DC's 7-bracket structure means most middle-class earners pay an effective rate between 5% and 7%. Here's what residents pay at common income levels (assuming standard deduction of $12,950, single filer):
$60,000 income: Taxable income ~$47,050. DC tax: $2,823. Effective rate: 4.7%
$100,000 income: Taxable income ~$87,050. DC tax: ~$5,719. Effective rate: 5.7%
$150,000 income: Taxable income ~$137,050. DC tax: ~$9,953. Effective rate: 6.6%
$250,000 income: DC tax: ~$18,440. Effective rate: 7.4%
$500,000 income: DC tax: ~$38,590. Effective rate: 7.7%
$1,500,000 income: DC tax: ~$125,000+. Effective rate: ~8.3%
Compare: At $100K, Maryland residents pay ~$5,000 (5.75% top rate + county tax) and Virginia residents pay ~$5,200 (5.75% flat). DC is slightly higher at the $100K level but pulls ahead sharply at higher incomes.
Section 02
DC Estate Tax: A Major Consideration for High-Net-Worth Residents
DC's estate tax is one of the most aggressive in the country. The exemption starts at $4 million — meaning estates above $4M owe DC estate tax at rates from 11.2% to 16%.
By comparison, the federal estate tax exemption for 2026 is approximately $13.6 million. This means many DC residents with estates between $4M and $13.6M owe DC estate tax but no federal estate tax.
Key DC estate tax facts:
The $4M exemption is not portable between spouses (unlike federal). Each spouse must separately qualify for the $4M exemption through estate planning — a revocable trust with AB trust provisions is commonly used by DC attorneys for married couples.
The marital deduction applies — assets left directly to a surviving spouse pass estate-tax-free, but the $4M exemption for the first spouse to die is often wasted without proper planning.
Many wealthy DC residents consider Maryland or Virginia residency specifically to escape DC's estate tax — a change that can save millions for large estates.
Section 03
Non-Residents Working in DC: Commuter Tax Rules
DC attempted to impose a commuter tax on Maryland and Virginia residents working in DC but was blocked by Congress (DC's unique status as a federal district means Congress must approve such taxes). As a result, commuters who live in Maryland or Virginia and work in DC pay their home state's income tax on all wages — not DC tax.
This creates an interesting dynamic: a Maryland resident earning $300,000 working in DC pays Maryland income tax (up to 5.75% state + up to 3.2% county) — significantly less than a DC resident earning the same amount (up to 9.25% on most of that income).
DC residents working remotely for Maryland or Virginia employers still pay DC income tax on all income — residency, not employment location, determines DC tax liability for DC residents.
Section 04
DC vs Maryland vs Virginia: Total Tax Burden Comparison
For earners in the DC metro area, jurisdiction choice has a real impact on total state/local tax burden:
DC at $100K: ~$5,719 income tax + relatively low property tax (Homestead Exemption helps) — good for renters, moderate for homeowners
Maryland at $100K: ~$5,000 state income tax + up to 3.2% county income tax (Montgomery: 3.2%, Prince George's: 3.2%) = total ~$8,200 state+county
Virginia at $100K: ~$5,200 state income tax + no county income tax = $5,200 total
For high earners ($500K+), DC becomes significantly more expensive than Virginia in particular. Virginia's 5.75% flat top rate vs DC's 9.25%–10.75% represents a gap of $15,000–$25,000+ annually at that income level.
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DC has 7 income tax brackets in 2026: 4% (up to $10,000), 6% ($10,001–$40,000), 6.5% ($40,001–$60,000), 8.5% ($60,001–$350,000), 9.25% ($350,001–$1M), 9.75% (at $1M, a narrow bracket), and 10.75% (above $1,000,000). Most middle-income DC residents pay an effective rate of 5–7%.
Q
Do Maryland residents working in DC pay DC income tax?
No. Maryland and Virginia residents who work in DC pay their home state income tax, not DC income tax. Congress has blocked DC from imposing a commuter tax on non-residents. However, DC residents working anywhere pay DC income tax based on their residency.
Q
What is the DC estate tax exemption?
DC's estate tax exemption is $4,000,000 — far below the federal exemption (~$13.6M for 2026). Estates above $4M owe DC estate tax at rates from 11.2% to 16%. This is a major planning consideration for DC residents with assets above $4M.
Q
Does DC tax capital gains?
Yes. DC taxes capital gains as ordinary income — the same 4%–10.75% brackets apply. There is no separate lower rate for capital gains in DC. Long-term capital gains receive the federal preferential rate (0%/15%/20%) but DC taxes them at the full ordinary income rate on top.
Q
What is DC's sales tax rate?
DC's general sales tax is 6%. However, restaurants are taxed at 10%, alcohol at 10.25%, and parking at 18% — among the highest parking taxes in the country. Groceries are exempt from sales tax.
Q
Is DC income tax high compared to Maryland and Virginia?
For most middle-income earners, DC's effective rate is roughly similar to Virginia (5.75%) and somewhat lower than Maryland's combined state+county rate (up to 9.45% combined for Montgomery County). But for high earners above $350,000, DC's 9.25% rate significantly exceeds Virginia's 5.75% cap.
Disclaimer:This guide is for educational purposes only and does not constitute tax or legal advice. Tax rates and rules change annually. Consult a qualified CPA or tax attorney for advice specific to your situation.