Bottom Line
Middle-Class Families: Tax-Friendly (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Most Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)
From a tax standpoint, Washington, D.C., is generally a good place to live (if you can stand all the political talk, that is). The Nation's Capital has a progressive income tax structure that gets steep quickly, but the top rate of 10.75% is reserved for taxable income over $1 million.
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The sales tax of 6% is modest, and property taxes in the District of Columbia are well below average (the median property tax rate is the eighth-lowest in the country).
D.C. does impose an estate tax, though.
District of Columbia Income Taxes
District of Columbia Income Tax Range
Low: 4% (on taxable income up to $10,000)
High: 10.75% (on taxable income over $1 million)
District of Columbia Taxation of Social Security Benefits
Social Security benefits are not taxed by the state.
District of Columbia Tax Breaks for Other Retirement Income
Tier 1 Railroad Retirement benefits are exempt.
District of Columbia Sales Tax
6% city sales tax.
- Groceries: Exempt
- Clothing: Taxable
- Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 6% to 8% excise tax
- Prescription Drugs: Exempt
District of Columbia Real Property Taxes
In the District of Columbia, the median property tax rate is $575 per $100,000 of assessed home value.
District of Columbia Property Tax Breaks for Retirees
In the District of Columbia, the median property tax rate is $564 per $100,000 of assessed home value.
Homeowners 65 and older may be able to reduce their property tax by 50%. For 2022 property tax reductions, the total 2020 federal adjusted gross income of everyone living on the property, excluding tenants, must be less than $139,900.
Homeowners 65 and older whose adjusted gross income is less than $50,000 may qualify for property tax deferral.
In addition, if you're 65 or older, any property tax increase might also be capped at 2%.
Seniors age 70 and older also have a higher income threshold for claiming the homeowner and renter property tax credit on their D.C. income tax return (the 2022 credit is worth up to $1,250). For the 2022 tax year, residents 70 and older are eligible for the credit if their federal adjusted gross income is $78,600 or less. For younger residents, the threshold is $57,600 or less.
District of Columbia Motor Fuel Taxes
Gasoline: 34.2¢ per gallon.
Diesel: 34.2¢ per gallon.
District of Columbia Sin Taxes
Cigarettes: $5.02 per pack ($5.02 per pack effective October 1, 2022)
Other tobacco products: 80% of wholesale price
Vapor products: 80% of wholesale price
Beer: $0.09 per gallon
Wine: $0.30 per gallon ($0.40 if above 14% alcohol by volume; $0.45 for sparkling wine)
Liquor: $1.50 per gallon
Off-premises alcohol sales are taxed at 10.25% (10% for to-go sales or delivery with food).
District of Columbia Estate and Inheritance Taxes
For 2022, Washington, D.C., estates valued over $4,254,800 are subject to a city estate tax ($4,528,800 for 2023). Rates in 2022 range from 11.2% to 16% (rates will be the same for 2023).
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