Yes, Washington DC has a local income tax, and it applies to most residents and workers
Washington DC is not a state, and it operates under different tax rules than the 50 states. DC does collect income tax from residents and from people who work within the district, even if they live elsewhere. The tax rate varies based on your income level, and DC residents pay both DC tax and federal income tax — they do not pay state income tax because DC is not a state.
If you live in DC, you file a DC tax return in addition to your federal return. If you work in DC but live in Maryland or Virginia, you typically pay DC tax on the income you earn there, though you may get a credit on your home state's return to avoid double taxation.
Key Takeaways
- Washington DC collects income tax on residents and on workers who earn money within the district, with rates ranging from 4% to 8.95% depending on income level.
- DC residents file a separate DC tax return each year, in addition to their federal return, using Form D-40.
- If you work in DC but live in Maryland or Virginia, you pay DC tax on DC-source income and may claim a credit on your home state return.
- DC tax brackets and rates change each year, so your rate depends on your filing status and total income for that tax year.
DC Income Tax Rates and Brackets
DC uses a progressive tax system, meaning the rate increases as your income rises. The rates are set by the DC government and change annually. For the 2024 tax year, rates range from 4% on the lowest income bracket to 8.95% on the highest, though the exact brackets and rates shift each year based on inflation adjustments.
Your filing status — single, married filing jointly, head of household, or married filing separately — determines which bracket you fall into. A married couple filing jointly reaches the top bracket at a higher income level than a single filer, so the same dollar amount of income may be taxed at different rates depending on how you file.
DC also allows a standard deduction, which reduces the income you actually pay tax on. The standard deduction amount varies by filing status and changes yearly. You can also itemize deductions if that results in a larger deduction than the standard amount.
Who Must File a DC Tax Return
You must file a DC return if you are a DC resident with income above a certain threshold, which depends on your filing status and age. The threshold is lower than the federal requirement, so you may need to file a DC return even if you do not owe federal tax.
Non-residents who earn income from DC sources — wages, self-employment income, rental income from DC property, or business income — must also file a DC return on that DC-source income only. If you live in Maryland or Virginia and work in DC, you file a DC non-resident return reporting only the money you earned in DC.
If you had DC taxes withheld from your paychecks or made estimated tax payments, you should file even if you do not owe tax, because you may be due a refund.
How to File Your DC Tax Return
DC residents and non-residents file using Form D-40 (resident return) or Form D-40NR (non-resident return). You can file on paper by mailing the form to the DC Office of the Chief Financial Officer, or you can file electronically through the DC tax portal or through tax software that supports DC returns.
The filing deadline is the same as the federal deadline, typically April 15. If you need more time, you can request an extension, which gives you until October 15 to file, though taxes are still due by April 15 if you owe money.
You will need your Social Security number, information about your income (W-2s, 1099s, or business records), records of any DC taxes withheld, and documentation of any deductions or credits you claim. If you are self-employed, you also file Schedule C-DC to report business income and expenses.
DC Tax Credits and Deductions
DC offers several credits that reduce the tax you owe, including the Earned Income Tax Credit (EITC), which is available to lower-income workers. The DC EITC is separate from the federal EITC and can result in a refund even if you owe no tax. DC also offers credits for dependent care expenses, education costs, and property tax paid.
Deductions reduce your taxable income before tax is calculated. In addition to the standard deduction, you can deduct contributions to traditional IRAs, student loan interest, and certain other expenses. If you itemize instead of taking the standard deduction, you can deduct mortgage interest, property taxes, and charitable donations, though DC limits some of these deductions.
Some DC residents may also may have access to for the Homestead Property Tax Deduction, which reduces the property tax on your primary residence. This is a separate filing from your income tax return.
Working in DC While Living Out of State
If you live in Maryland or Virginia and work in DC, you owe DC tax on the income you earn in DC. You report this income on Form D-40NR and pay tax at the same rates as DC residents. Maryland and Virginia both allow a credit for DC taxes paid, so you do not pay tax twice on the same income — you pay DC tax and then claim a credit on your home state return.
The credit works by reducing your home state tax liability by the amount of DC tax you paid. In most cases, this means you pay whichever is higher: the DC tax or your home state tax. Some workers find they owe more to one state than the other, depending on the tax rates and brackets in each jurisdiction.
You will need to file both a DC return (non-resident) and a return in your home state. Your employer should withhold DC tax from your paycheck if you work in DC, but verify this with your payroll department, because some employers do not withhold correctly for non-residents.
DC Tax Withholding and Estimated Payments
If you are an employee, your employer withholds DC tax from your paycheck based on the W-4 form you complete. The amount withheld depends on your income, filing status, and the number of dependents you claim. If too much or too little is withheld, you will owe tax or receive a refund when you file.
If you are self-employed or have income that is not subject to withholding, you may need to make estimated tax payments to DC four times per year. These payments are due on April 15, June 15, September 15, and January 15. If you do not pay enough through withholding and estimated payments, you may owe a penalty when you file.
You can adjust your withholding at any time by submitting a new W-4 to your employer. If you expect a large refund or to owe a large amount, changing your withholding can help you avoid overpaying or underpaying throughout the year.
Frequently Asked Questions
Do DC residents pay state income tax in addition to DC tax?
No. DC is not a state, so there is no state income tax. DC residents pay DC local income tax and federal income tax, but not state tax. The DC tax serves the role that state income tax plays in other places.
Can I claim DC taxes paid as a deduction on my federal return?
Yes, if you itemize deductions on your federal return, you can deduct DC income taxes paid. You report this on Schedule A as part of your state and local taxes (SALT) deduction, though the total SALT deduction is capped at $10,000 per year for most filers.
What if my employer did not withhold DC tax from my paycheck?
Contact your payroll department and provide them with a completed W-4 form indicating you work in DC. If they continue not to withhold, you may owe tax and a penalty when you file. You can also make estimated payments to DC to cover the tax you expect to owe.
Do I have to file a DC return if I only worked in DC for part of the year?
You must file if your DC-source income exceeds the filing threshold for your status, even if you worked there for only part of the year. If you had DC taxes withheld, you should file to claim any refund due.
Where do I send my DC tax return?
Mail paper returns to the DC Office of the Chief Financial Officer, or file electronically through the DC tax portal at otr.cfo.dc.gov. Electronic filing is faster and you receive confirmation of receipt immediately.