Is Washington, D.C. high in taxes?

Washington, D.C. sits at both extremes of the tax spectrum. Income tax rates run from 4% to 10.75%, among the steepest in the country for six-figure earners. Yet residential property tax rates are the lowest in the entire D.C. metro area, and groceries are exempt from sales tax. Whether D.C. feels "high-tax" to you depends heavily on how much you earn and whether you own a home.

Income tax: yes, genuinely high

D.C. uses a progressive bracket system for tax year 2025, with rates ranging from 4% to 10.75%, the top rate hitting income over $1,000,000. But the bite comes well before seven figures. The 8.5% bracket starts at $60,001 and runs all the way to $250,000. That means a household earning $150,000 is already well into the 8.5% band.

Rates are quite high compared to national averages. The comparison to the DMV neighbors is stark. Virginia's graduated income tax starts at 2% and tops out at 5.75%, with no local income tax layered on top. Maryland adds county-level local income taxes on top of state taxes, ranging from 2.25% to 3.20%. D.C. has the highest headline rate for very high-income taxpayers, but fewer layers, there's no separate county or city add-on because the District functions as both city and state for tax purposes.

The dollar gap is real at high incomes. On $500,000 of income, a Virginia filer pays roughly $13,561 in state income tax; a D.C. filer pays around $18,440. Virginia saves approximately $14,000 to $18,000 per year compared with Maryland and $20,000 to $25,000 per year compared with D.C. at that income level, purely on state and local income taxes.

One 2025 change works in residents' favor. The D.C. Earned Income Tax Credit jumped from 70% of the federal EITC in 2024 to 100% for tax year 2025, a real boost for lower-wage workers.

Property tax: the low side of the region

This is where D.C. surprises people. As of 2026, the residential property tax rate is $0.85 per $100 of assessed value, and the effective rate after deductions is lower still. Owner-occupied properties enjoyed an effective tax rate of $0.68 per $100 of assessed value in tax year 2024.

Compared to the uniform property tax rates in neighboring Virginia and Maryland counties, D.C. has the lowest residential property tax rate in the entire Washington metropolitan area. A 2025 Redfin summary using Tax Foundation data puts effective property tax rates at 0.90% in Maryland, 0.77% in Virginia, and 0.61% in D.C.

Owner-occupants get an additional cushion. The D.C. homestead deduction reduces the assessed value of a qualifying primary residence by $89,850 for tax year 2025, meaning taxes are calculated as if the home were worth that much less, saving roughly $764 a year at the current rate. The homestead program also limits the annual increase in taxable assessed value to 10%, so even if market value jumps 20% or 30%, the tax basis can only rise by 10%.

Homeowners who are 65 or older may also be able to reduce their property tax bill by 50%, subject to an income test.

One catch: because so many commercial properties are owned by the federal government and tax-exempt, the burden shifts. In tax year 2025, only 58% of total real property in D.C. was taxable, and the federal tax exemption cost the District more than $1.2 billion in foregone revenue.

Sales tax: in flux and climbing

Effective October 1, 2025, D.C. raised its general sales tax rate from 6% to 6.5% on goods and taxable services. Another increase to 7% is scheduled for 2026. Groceries and prescription drugs are exempt. Restaurants already carry a 10% rate, and hotel rooms run even higher.

D.C. applies sales tax to a wide range of services, including data processing, health clubs and gyms, landscaping, and real property maintenance, categories that many neighboring states leave untaxed.

Estate tax: D.C. is one of the few jurisdictions that still has one

Washington, D.C. has an estate tax that applies to estates of over $4.873 million in 2025, with rates ranging from 11.2% to 16%. Virginia has no estate tax. Maryland does, though its exemption threshold differs. For anyone doing long-term wealth planning, this is a line item worth knowing.

The bottom line by income level

For lower and middle-income earners, D.C. can actually yield the lowest overall tax burden in the region, an advantage that comes from its generous standard deduction, relatively low real estate tax rates, exemption of groceries from sales tax, and no vehicle property taxes. For high earners, Virginia emerges as more favorable, mainly because Virginia's individual income tax caps at 5.75%, compared to D.C.'s 8.5% rate that applies to much of a high earner's income.

Sources

• TaxAct: Washington, D.C. Income Tax Rates & Brackets 2025
• Kiplinger: District of Columbia Tax Guide
• DC Fiscal Policy Institute: Where DC Gets Its Money, Residential Property Tax
• SmartAsset: District of Columbia Property Tax Calculator
• TaxCloud: D.C. Sales Tax Rate Increase 2025
• D.C. Office of Tax and Revenue: Notice of Oct. 1, 2025 Tax Changes
• Virginia vs Maryland vs Washington DC Taxes 2025
• TGR Advisors: Maryland vs Virginia vs DC Tax Comparison
• D.C. Office of the Chief Financial Officer: Tax Facts 2025