The District of Columbia tax code treats DC as both a city and a state, so residents and businesses here pay a full stack of income, property, sales, business franchise, and estate taxes administered by the Office of Tax and Revenue. Individual income tax runs on a progressive scale from 4% to 10.75%, the general sales tax is 6% (scheduled to rise to 7% on October 1, 2026), and businesses pay a flat 8.25% franchise tax. Returns for tax year 2025 are due April 15, 2026, and most filers use the MyTax.DC.gov portal.
Who Counts as a DC Resident
DC taxes you as a resident if you are domiciled in the District at any time during the year, or if you keep a place to live in DC for 183 days or more in the taxable year, even when your permanent home is somewhere else.1D.C. Law Library. District of Columbia Code 47-1801.04 – General Definitions The 183-day rule is what catches people who split time between DC and another jurisdiction.
Certain federal officials get a carve-out. Presidential appointees confirmed by the Senate and Supreme Court justices are not treated as DC residents just because they live in the District while serving.
If you live in Virginia or Maryland and commute into DC for work, DC does not tax your wages. The District does not impose income tax on the earned income of non-residents, which is why the commuter workforce files only in their home state.
Individual Income Tax Rates
Residents pay tax under DC Code § 47-1806.03 on a bracket system. For taxable years beginning after December 31, 2021, the brackets are:
- Up to $10,000: 4%
- $10,001 to $40,000: $400 plus 6% of the amount over $10,000
- $40,001 to $60,000: $2,200 plus 6.5% of the amount over $40,000
- $60,001 to $250,000: $3,500 plus 8.5% of the amount over $60,000
- $250,001 to $500,000: $19,650 plus 9.25% of the amount over $250,000
- $500,001 to $1,000,000: $42,775 plus 9.75% of the amount over $500,000
- Over $1,000,000: $91,525 plus 10.75% of the amount over $1,000,000
Your DC return starts from your federal adjusted gross income, so an error on the federal return carries straight through to the District one.2D.C. Law Library. District of Columbia Code 47-1806.03 – Tax on Residents and Nonresidents – Imposition and Rates Wages, interest, and other income are taxable to residents regardless of where the money was earned.
DC also offers an Earned Income Tax Credit equal to 100% of the federal EITC, and residents who file with an Individual Taxpayer Identification Number rather than a Social Security Number can qualify for the DC version even if they cannot claim the federal one.3Office of Tax and Revenue. DC EITC
Business Franchise Tax
DC does not have a separate corporate income tax. Instead, corporations and unincorporated businesses alike pay a franchise tax at a flat 8.25% on taxable income from DC sources, and the rule applies to domestic and foreign entities.4D.C. Law Library. District of Columbia Code 47-1807.02 – Tax on Corporations – Levy and Rates
Unincorporated businesses face a minimum tax of $250, which rises to $1,000 if DC gross receipts top $1 million.5D.C. Law Library. District of Columbia Code 47-1808.03 – Tax on Unincorporated Businesses – Levy and Rates Sole proprietors, partnerships, and LLCs that run a trade or business in DC and earn above the filing threshold owe this tax. New business owners often assume the franchise tax hits only corporations and get caught by surprise.
Real Property Tax
Every parcel in the District gets an annual assessment at fair market value, and the Council sets different rates by property class.6D.C. Law Library. District of Columbia Code 47-813 – Classes of Property Current rates per $100 of assessed value:
- Class 1A, residential including multifamily: $0.85
- Class 1B, residential with no more than two units: $0.85 on the first $2.558 million of assessed value, $1.00 above that
- Class 2, commercial and industrial: $1.65 up to $5 million; $1.77 between $5 million and $10 million; $1.89 above $10 million
A home assessed at $600,000 owes roughly $5,100 a year before any deductions. A commercial property at the same value owes $9,900.7Office of Tax and Revenue. Real Property Tax Rates
Homestead Deduction
Owner-occupants using the property as a primary residence can shave $89,850 off the taxable assessed value for the current tax year.8Office of Tax and Revenue. Notice of Oct 1 2025 Tax Changes The statutory base is $67,500, bumped annually since October 2012 by a cost-of-living adjustment.9D.C. Law Library. District of Columbia Code 47-850 – Residential Property Tax Relief – Homestead Deduction for Houses and Condominium Units You have to apply. It is not automatic, and homeowners who never filed the application are overpaying.
Senior and Disabled Owner Relief
Homeowners who are 65 or older, or who have a qualifying permanent disability, can cut their property tax bill in half under DC Code § 47-863. The owner must hold at least a 50% interest, actually live in the home, and keep household income under a cap set at a $125,000 base and adjusted annually for cost of living.10D.C. Law Library. District of Columbia Code 47-863 – Reduced Tax Liability for Property Owners Over Age 65 and Disabled Property Owners Qualifying disabilities include those recognized by the Social Security Administration, railroad retirement disability, and federal or DC government disability programs.
Sales and Use Tax
DC’s general sales tax is 6.0% through September 30, 2026, then 7.0% starting October 1, 2026.11D.C. Law Library. District of Columbia Code 47-2002 – Imposition of Tax The increase is already in the statute, so businesses need to update point-of-sale systems before the switchover.
Several categories carry much higher rates:
- Parking and vehicle storage: 18% (lots run by WMATA next to Metro stations are exempt)
- Off-premises liquor, beer, and wine: 10.25%
- Transient accommodations: 10.20% under the sales tax statute, with additional fees pushing the effective combined rate to roughly 14.95%
- Prepared food and drinks at restaurants: 9%
The companion use tax applies to goods bought outside DC and brought in for use here. Buy furniture in Virginia and put it in your DC apartment, and you owe DC use tax on it. Groceries and prescription medicines are exempt from both sales and use tax.
Estate Tax
DC runs its own estate tax, separate from the federal one. For 2026, estates below the zero bracket amount of approximately $4,988,400 owe nothing. Estates above that are taxed on a graduated scale starting at 6.4% and climbing to a top rate of 16% on amounts over $10 million.12D.C. Law Library. District of Columbia Code 47-3702 – Tax on Transfer of Taxable Estate of Residents Amounts Credit
Because the DC exemption sits well below the federal estate tax exemption, an estate can owe nothing to the IRS and still owe DC a substantial sum. Families whose main asset is a DC home that has appreciated into the multi-million range are the most common surprise cases.
Filing Deadlines and Extensions
Individual income tax returns (Form D-40) for tax year 2025 are due April 15, 2026. If the due date falls on a weekend or legal holiday, it moves to the next business day.13Office of Tax and Revenue. Individual Income Tax Forms
Filing Form FR-127 by the April deadline gives you an automatic six-month extension to October 15.14Office of Tax and Revenue. Individual Income Tax Filing The extension buys time to file, not time to pay. You still have to estimate your liability and send payment with the FR-127 to avoid interest and the late-payment penalty. Taxpayers living or traveling outside the United States can request a further six-month extension beyond the initial one.
How to File and Pay
MyTax.DC.gov is the primary filing portal. You can file the D-40, submit estimated payments on the D-40ES, and request extensions on the FR-127 through the site. Paper returns are still accepted by mail to the Office of Tax and Revenue, but electronic filing is faster and gives you an immediate confirmation of receipt.
Gather your W-2s, any 1099s for interest, dividends, or freelance income, and your completed federal return before you start. Your DC return uses federal adjusted gross income as its starting number, so finish the federal return first. If you moved into or out of the District during the year, keep the exact dates of the move handy, because residency status drives how much DC tax you owe.
Balances due can be paid by ACH debit, credit card, or a check mailed with a payment voucher. Refunds from electronic returns come through faster than paper, and you can track yours with the “Where’s My Refund?” tool on the OTR website.
Penalties and Interest
Late filing and late payment each carry a penalty of 5% of the unpaid tax per month or partial month, capped at 25%.15D.C. Law Library. District of Columbia Code 47-4213 – Failure to File Return or to Pay Tax They stack. File late and pay late, and both 5% monthly charges run at once. The penalty can be waived for reasonable cause that is not willful neglect, but the bar is high.
Interest on unpaid balances accrues at 10% per year, compounded daily, and runs from the original due date rather than from the date of any notice.16Office of the Chief Financial Officer. 2026 Estimated Payment for Individual Income Tax D-40ES An extension stops the late-filing penalty but does nothing to pause interest on tax you owe. To avoid an underpayment penalty on estimated taxes, your combined withholdings and estimated payments must equal at least 90% of your 2026 DC tax or 110% of your 2025 DC tax.