Personal income tax
Washington, D.C., levies income taxes from District residents utilizing four tax brackets.
- 4 percent on the first $10,000 of taxable income.
- 6 percent on taxable income between $10,001 and $40,000.
- 8.5 percent on taxable income between $40,001 and $350,000.
- 8.95 percent on taxable income of $350,001 and above.
Income from Social Security and up to $3,000 of military retired pay, pension income or annuity income from D.C. or the federal government is excluded.
District of Columbia residents must file their tax returns by April 15, or the next business day if that date falls on a weekend or holiday.
Renters and homeowners who have taxable income of $20,000 or less may be eligible for a tax credit by filing Schedule H, included in the D-40 material. If you are not required to file a District of Columbia tax return, send in Schedule H alone to claim the credit.
The general consumer sales tax in the District of Columbia is 5.75 percent.
However, Washington, D.C., actually levies a sales tax with five different rates. This rate structure is utilized, in part, to take advantage of the district's special status as a tourist center and to increase the contribution of nonresidents working in the city. The current sales tax rates are:
- 5.75 percent for tangible personal property.
- 10 percent for alcohol sold for off-premises consumption.
- 10 percent for restaurant meals, takeout food, rental cars and telephone calling cards.
- 18 percent for commercial parking.
- 14.5 percent for hotel and motel rooms.
Items exempt from the District of Columbia sales tax include groceries, prescription and nonprescription medicines, and residential utility services.
Personal and real property taxes
Property assessments are conducted by the Assessment Division, Real Property Tax Administration, Office of Tax and Revenue.
There are four classes of real property in the District of Columbia. Class 1 is residential real property including multifamily. Class 2 is commercial and industrial real property including hotels and motels. Class 3 is vacant real property. Class 4 is blighted real property. Owner-occupied residential property, known as Class 1 property, is taxed at a lower rate than property in other classes.
The tax rate is the amount of tax on each $100 of the assessed value of the property. Rates differ for each class of property. The rates are established by the Council of the District of Columbia and may change from year to year. Check current rates at the Office of Tax and Revenue website.
Property tax bills are mailed twice per year. The first half of your bill is mailed in February, and the tax payment is due by March 31. The second half of your bill is mailed in August, and the tax payment is due Sept. 15. Penalties and interest are charged for late payments.
The District of Columbia offers several property tax relief programs to assist property owners. Popular property tax relief efforts include a homestead deduction, tax credits for historic properties, senior citizen tax relief, and property tax exemptions and deferrals. Check the link above for more details and eligibility requirements to claim these tax credits.
The real property tax accounts for $1.9 billion, or 31 percent, of the District's 2014 fiscal year budget. That's a close second to the $2.1 billion (32.9 percent of the budget) expected from income tax collection in the nation's capital this fiscal year.
Inheritance and estate taxes
Every beneficiary of assets with a taxable situs in D.C. and with a value in excess of $1,000 must file an Inheritance Tax Return (Form FR-19).
The district's estate tax is decoupled from the federal estate tax laws and therefore still imposes its own estate tax. A D.C. Estate Tax Return (Form D-76 or D-76 EZ) must be filed if the gross estate is $1 million or more.
Other Washington, D.C. tax facts
The District of Columbia's Ballpark Omnibus Financing Revenue Act of 2004 was enacted to help repay the bonds issued to build the city's Major League Baseball ballpark. The tax is assessed on entities with annual District gross receipts of $5 million or more.
The D.C. earned income tax credit has been expanded to noncustodial parents who meet certain conditions.
You can report vacant property to the Department of Consumer and Regulatory Affairs by calling (202) 442-4332.