The District of Columbia imposes its own estate tax on the estates of residents whose gross estate exceeds $4,988,400 for deaths occurring in 2026, with graduated rates from 11.2% to 16%.1Office of Tax and Revenue. Notice of Oct. 1, 2025 Tax Changes The federal exemption for the same year is $15 million, so many DC estates owe nothing to the IRS but still face a sizable District bill.2Internal Revenue Service. Whats New – Estate and Gift Tax The return is due within 10 months of death.
The 2026 Exemption and Why It Matters
For anyone who dies between January 1 and December 31, 2026, the first $4,988,400 of the gross estate is taxed at 0%. If the estate falls below that figure, no return is required and no tax is owed. The exclusion adjusts annually with inflation under a cost-of-living formula tied to the Consumer Price Index.3D.C. Law Library. District of Columbia Code 47-3701 – Definitions
The gap between the DC exclusion and the $15 million federal exemption is where most people get caught. An $8 million estate owes zero federal estate tax but could owe DC tax on roughly $3 million. Longtime District homeowners who have watched real estate values climb for decades are often the ones surprised to learn they are above the threshold.
What Counts Toward the Gross Estate
For residents, the gross estate includes everything the decedent owned at death: real estate wherever located, bank accounts, investment portfolios, retirement accounts, life insurance proceeds payable to the estate, vehicles, art, jewelry, and business interests. A DC resident’s vacation home in another state still counts, though a credit may offset the tax if the other state also imposes a death tax.4D.C. Law Library. District of Columbia Code 47-3702 – Tax on Transfer of Taxable Estate of Residents; Amounts; Credit Each asset is valued at fair market value on the date of death. Real property typically requires an appraisal or recent assessment; for financial accounts, the date-of-death balance generally controls.
Non-residents owe DC estate tax only on property with a taxable situs in the District, chiefly real estate and tangible personal property physically located within DC. The tax is figured by calculating what the full estate would owe under the resident schedule, then multiplying by the ratio of DC-situs property to the total gross estate.5D.C. Law Library. District of Columbia Code 47-3703 – Tax on Transfer of Taxable Estate of Nonresidents A Virginia resident who owns a $2 million DC rental property may trigger a DC filing obligation depending on total estate size.
Rate Brackets for 2026
Above the exclusion, rates climb through graduated brackets to a top rate of 16% on amounts over $10 million.4D.C. Law Library. District of Columbia Code 47-3702 – Tax on Transfer of Taxable Estate of Residents; Amounts; Credit The operative brackets for a 2026 estate:
- $4,988,400 to $5,000,000: 11.2%
- $5,000,001 to $6,000,000: 12%
- $6,000,001 to $7,000,000: 12.8%
- $7,000,001 to $8,000,000: 13.6%
- $8,000,001 to $9,000,000: 14.4%
- $9,000,001 to $10,000,000: 15.2%
- Over $10,000,000: 16%
A worked example: a DC resident who dies in 2026 with a $7 million gross estate has about $2,011,600 above the exclusion. The first $11,600 is taxed at 11.2%, the next $1,000,000 at 12%, and the remaining $1,000,000 at 12.8%, producing roughly $249,299 in DC estate tax. That liability stacks on top of any federal estate tax that might apply.
No Portability Between Spouses
This is where DC departs sharply from federal rules. Federal law lets a surviving spouse claim the deceased spouse’s unused exemption, a feature known as portability. The District does not allow it. When a DC resident dies, any unused portion of the DC exclusion is permanently lost.3D.C. Law Library. District of Columbia Code 47-3701 – Definitions
The practical effect matters for couples with combined assets above the exclusion. If the first spouse leaves everything to the survivor under the unlimited marital deduction, the first spouse’s DC exclusion is wasted. When the survivor later dies holding all the couple’s assets, only one exclusion shelters the estate. For a couple with $9 million combined, that can be the difference between owing no DC estate tax and owing tax on roughly $4 million.
Credit shelter trusts, sometimes called bypass trusts, are the standard workaround. The first spouse to die funds a trust up to the DC exclusion amount; those assets pass free of DC tax and stay out of the survivor’s estate, while the surviving spouse can still benefit from the trust during their lifetime. When the surviving spouse is not a U.S. citizen, a qualified domestic trust is typically necessary to claim the marital deduction at all.
No Separate Inheritance Tax
DC does not impose an inheritance tax. The estate pays the estate tax before distributions; beneficiaries do not owe a separate District tax on what they receive.6D.C. Law Library. District of Columbia Code – Chapter 37 – Inheritance and Estate Taxes Maryland and some other nearby states impose both, which is a frequent source of confusion for heirs.
Filing, Deadlines, and Penalties
The personal representative files the DC estate tax return electronically through MyTax.DC.gov. The primary form is Form D-76; a simpler Form D-76EZ is available for estates that meet certain criteria.7Office of Tax and Revenue. DC Inheritance and Estate Tax Forms If the estate was large enough to require a federal return, pages 1 through 3 and Schedules A through O of IRS Form 706 must be attached, along with asset valuations and a copy of the will.8Office of Tax and Revenue. 2024 D-76 Estate Tax Instructions
The return and payment are due within 10 months of the date of death.9D.C. Law Library. District of Columbia Code 47-3705 – Filing Returns; Payment of Tax Due That is a month longer than the federal nine-month deadline, which occasionally trips up executors handling both. To request more time, the executor files Form D-77 before the original deadline for a six-month extension.10Office of Tax and Revenue. 2025 D-76 Estate Tax Instructions If a federal extension for Form 706 has been obtained, the DC filing deadline automatically extends to 30 days after the federal extension period ends, provided the executor sends OTR a copy of the federal extension.
An extension to file is not an extension to pay. Unpaid tax accrues interest at 10% per year, compounded daily, and a late-filing penalty of 5% per month applies, capping at 25% of the unpaid tax.8Office of Tax and Revenue. 2024 D-76 Estate Tax Instructions One exception: if a valid federal extension is in place, the payment deadline follows the extended filing deadline rather than the original 10-month mark. Executors who know tax will be owed but need more time for paperwork should estimate the liability and pay as much as possible by the deadline, then file for the extension.