Yes, DC has a local income tax, and it works differently than state income tax
Washington DC is not a state, so it does not have state income tax. Instead, DC has its own local income tax that applies to residents and people who work in DC. The tax is administered by the DC Department of Revenue, not a state revenue office. If you live or work in DC, you file a DC tax return separate from your federal return, even though DC is not a state.
The DC income tax rate varies by income level, ranging from 4% to 8.95% as of 2024. The exact rate you pay depends on your filing status and total income. DC also offers a standard deduction and tax credits similar to federal tax rules, so your actual tax bill may be lower than the top rate.
Key Takeaways
- DC residents and DC workers pay local income tax to the DC Department of Revenue, not to a state government.
- DC income tax rates range from 4% to 8.95% depending on your income level and filing status.
- You file a separate DC tax return in addition to your federal return if you live or work in DC.
- DC offers a standard deduction and tax credits that can reduce the amount of tax you owe.
- If you work in DC but live in Maryland or Virginia, you may owe DC tax on your DC wages, though your home state may offer a credit.
Who pays DC income tax
You owe DC income tax if you are a DC resident or if you earned income in DC during the tax year. Residency for tax purposes means you lived in DC for more than half the year or maintained a permanent home there. If you moved to or from DC mid-year, you may owe tax for only part of the year.
People who work in DC but live in Maryland or Virginia still owe DC income tax on the wages they earned in DC. However, Maryland and Virginia both offer tax credits to their residents who pay DC tax, so you do not pay tax twice on the same income. You claim the credit on your home state return after paying DC tax.
DC income tax rates and brackets for 2024
DC income tax brackets are adjusted each year for inflation. The rates and income thresholds change, so the brackets that applied last year may not apply this year. The DC Department of Revenue publishes updated brackets in January of each tax year.
| Filing Status | Income Range | Tax Rate |
|---|---|---|
| Single | $0 to $10,000 | 4% |
| Single | $10,001 to $40,000 | 6% |
| Single | $40,001 to $99,999 | 6.5% |
| Single | $100,000+ | 8.95% |
| Married Filing Jointly | $0 to $20,000 | 4% |
| Married Filing Jointly | $20,001 to $80,000 | 6% |
| Married Filing Jointly | $80,001 to $199,999 | 6.5% |
| Married Filing Jointly | $200,000+ | 8.95% |
These brackets are examples based on recent years. You should check the DC Department of Revenue website or your tax forms for the current year's brackets before calculating your tax.
DC standard deduction and tax credits
DC allows a standard deduction that reduces your taxable income. The standard deduction amount depends on your filing status and age. For 2024, the standard deduction for a single filer under age 65 is different from the standard deduction for a married couple filing jointly, and both are higher if you are age 65 or older.
DC also offers tax credits that directly reduce the amount of tax you owe. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and is often larger in DC than the federal EITC. DC also offers credits for dependent children, property tax paid, and rent paid. You claim these credits on your DC tax return.
How to file DC income tax
You file your DC tax return using Form D-40 (the DC Individual Income Tax Return) if you are a resident, or Form D-40NR if you are a nonresident who earned DC income. Both forms are available on the DC Department of Revenue website. You can file by mail or electronically through approved tax software.
The DC tax filing deadline is the same as the federal deadline: April 15 of the year following the tax year. If April 15 falls on a weekend or holiday, the deadline moves to the next business day. You can request an extension to file, but taxes owed are still due by April 15 even if you extend your filing deadline.
If you use tax software to file your federal return, many programs also allow you to file your DC return at the same time. Some tax software charges a fee for the DC return, while others include it. The DC Department of Revenue also offers free filing options for lower-income residents through the Community Tax Aid Network.
DC tax withholding from paychecks
If you work in DC, your employer should withhold DC income tax from your paycheck. You provide a DC withholding form (Form D-4) to your employer when you start the job. The withholding amount is based on your filing status, number of dependents, and other income you expect to earn that year.
If you work in DC but live in Maryland or Virginia, you may need to file a withholding form with your DC employer even though you are not a DC resident. Some employers in DC are familiar with this situation and will withhold DC tax correctly. If your employer does not withhold DC tax and you owe it at tax time, you are still responsible for paying it.
Frequently Asked Questions
Do I have to pay DC income tax if I work in DC but live in Maryland or Virginia?
Yes, you owe DC income tax on the wages you earn in DC. However, Maryland and Virginia both offer tax credits to residents who pay DC tax, so you do not pay tax twice on the same income. You claim the credit on your home state return.
What is the difference between DC income tax and federal income tax?
Federal income tax goes to the U.S. government and is the same for all states. DC income tax goes to the DC government and applies only to DC residents and DC workers. You file both a federal return and a DC return if you live or work in DC.
Can I deduct DC income tax I paid on my federal return?
You can deduct state and local taxes (SALT) on your federal return, but only up to $10,000 per year. This limit applies to the total of all state income tax, local income tax, property tax, and sales tax you paid. Many people do not benefit from this deduction because the standard deduction is higher.
What happens if I do not file a DC tax return when I owe it?
The DC Department of Revenue can assess penalties and interest on unpaid taxes. If you owe DC tax and do not file, the department may contact your employer or send you a notice. It is better to file even if you cannot pay the full amount, because the penalty for not filing is usually larger than the penalty for paying late.
Does DC have sales tax?
Yes, DC has a sales tax of 6% on most purchases. Sales tax is separate from income tax and is collected at the point of sale. Some items like groceries and prescription medications are exempt from DC sales tax.