District of Columbia Tax Guide 2025
Explore the District of Columbia's tax rates for income, sales, property, retirement, and more. Learn how District of Columbia compares nationwide.
Kate Schubel
Navigating the complexities of state taxes can be daunting, but understanding Washington D.C.'s tax landscape is essential for residents and newcomers alike.
In this guide, we'll explore key components of the District of Columbia tax system, from income and sales taxes to property taxes and retirement benefits.
District of Columbia tax: Overview
The District of Columbia offers a mix of tax pros and cons.
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Its progressive income tax system ramps up quickly, which can mean higher bills for some. However, retirees get a break since the District doesn't tax Social Security benefits.
D.C. also has one of the lowest sales tax rates in the country, which can help keep everyday spending in check.
On the downside, property taxes in the District can be steep, especially for those inheriting property. The city also has one of the more significant estate taxes, which can be a surprise for heirs.
Let’s take a closer look at what D.C.'s tax landscape means for current and future residents.
In the news: The D.C. City Council recently enacted an emergency tax bill. District of Columbia residents will now miss out on the "senior bonus" deduction, overtime pay, and tipped tax breaks on their local income returns. For more information on how long this emergency legislation will last, check out Kiplinger's report: Emergency Tax Bill Ends $6,000 Senior Deduction and Tip, Overtime Tax Breaks in D.C..
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
District of Columbia income tax
The District of Columbia has a graduated individual income tax rate that ranges from 4% to 10.75%, according to the Tax Foundation.
District of Columbia retirement taxes
District of Columbia taxes in retirement: Social Security retirement and Railroad Retirement benefits are tax-exempt in Washington D.C. However, military retirement pay is fully taxable.
Income Tax on Taxable Income: Low of 4% (on less than $10,000) and a high of 10.75% (on more than $1,000,000)
- Social Security: Not taxable
- Pensions: Taxable
- 401(k) and IRA Distributions: Taxable
District of Columbia sales tax
Washington, DC has a 6% city sales tax rate.
Source: Sales Tax Handbook
- Groceries: Exempt
- Prescription drugs: Exempt
- Clothing: Taxable
How much are property taxes in DC?
In the District of Columbia, the average effective property tax rate is 0.61%, which is lower than in most states. Even so, homeowners face high median property tax bills, due in part to high home prices.
District of Columbia Property Tax Breaks for Retirees
Homeowners of all ages might qualify for Washington D.C.'s homestead exemption, but eligible homeowners 65 and older may also be able to reduce their property tax by 50%.
For 2025 property tax reductions, the total 2023 federal adjusted gross income of everyone living in the property, excluding tenants, must be less than $159,750.
Applicants must also have at least 50% ownership of the property and reside at the property to qualify.
Washington DC gas tax
Gasoline | $0.24 per gallon |
Diesel | $0.24 per gallon |
Source: Sales Tax Handbook
District of Columbia taxes on alcohol and tobacco
Product | Tax Amount |
|---|---|
Cigarettes | $2.50 per pack of 20 |
Other Tobacco Products | 67% of wholesale price |
Medical Marijuana | 5.75% |
Recreational Marijuana | 5.75% |
Source: Sales Tax Handbook
Product | Tax Amount |
|---|---|
Wine | $0.30 per gallon |
Beer | $0.09 per gallon |
Liquor | $1.50 per gallon |
Source: Sales Tax Handbook
District of Columbia estate and inheritance taxes
For 2025, Washington, D.C. estates valued over $4,873,200 are subject to a city estate tax. Rates in 2025 range from 11.2% to 16%.
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