DISTRICT OF COLUMBIA
Return to Retiree Tax Map
BOTTOM LINE: NOT TAX-FRIENDLY
The District of Columbia can be expensive for retirees. Although it exempts Social Security income and up to $3,000 of some pension income, a steep 8.5% tax rate hits other income over $40,000. (Its top income tax rate of 8.95% hits taxable income over $350,000.) Real estate taxes in this traditionally expensive housing market are assessed at 100% of market value, but senior homeowners under certain income thresholds may qualify for a homestead exemption.
STATE SALES TAX
6% (food, prescription and nonprescription drugs, and residential utility services are exempt).
INCOME-TAX RANGE
Low: 4% (for taxable income up to $10,000)
High: 8.95% (for taxable income above $350,000)
SOCIAL SECURITY
Benefits are not taxed.
EXEMPTIONS FOR OTHER RETIREMENT INCOME
Taxpayers 62 and older can exclude $3,000 of military, federal and D.C. pensions. All state government pensions are fully taxed.
PROPERTY TAXES
Property is assessed at 100% of market value. Taxes on owner-occupied real estate are 85 cents per $100 of assessed value. The homestead deduction exempts the first $67,500 of assessed value from taxes. Several property-tax relief programs are available to assist property owners and first-time home buyers. These include a homestead deduction, tax credits for historic properties, senior citizen tax relief, and property-tax exemptions and deferrals.
Tax breaks for seniors: Homeowners 65 and older with household adjusted gross income of less than $100,000 receive an additional exemption equal to 50% of their homestead deduction.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax. Estates valued over $1 million are subject to estate tax. The top estate tax rate is 16%.
Visit RetirementLiving.com for a complete rundown of taxes in the District of Columbia.
Printer-friendly version
