Calculating DC itemized deductions begins with the total from your federal Schedule A, then requires a set of District-specific adjustments: strip out all state and local income taxes, add back real estate and other non-income taxes at their full uncapped amounts, cap charitable contributions at 15% of adjusted gross income with no carryforward, and if your DC AGI exceeds $200,000, cut most remaining deductions by 5% of the excess. The Office of Tax and Revenue walks you through the arithmetic in Calculation F of the D-40 instructions, but the logic is worth understanding on its own so you can catch software errors and know why your DC number differs from your federal one.
Your Federal Election Controls Your DC Election
The District requires the same deduction choice on Form D-40 that you made on your federal Form 1040. If you itemized federally, you must itemize in DC. If you took the federal standard deduction, you must take the DC standard deduction. When spouses file separate DC returns, neither spouse can claim the standard deduction if the other itemizes.1D.C. Law Library. DC Code 47-1803.03 – Gross Income, Deductions
So the question of whether to itemize in DC is really the federal question. Once you have made it there, DC gives you no independent choice.
State and Local Taxes: Income Taxes Out, Property Taxes Uncapped
DC does not accept the federal SALT deduction as-is. It makes two moves that partly offset each other.
First, DC removes all state and local income taxes from your deduction. That includes DC income taxes, income taxes paid to other states, and DC franchise taxes. None of these are deductible on your DC return.1D.C. Law Library. DC Code 47-1803.03 – Gross Income, Deductions
Second, DC adds back your real estate taxes and other non-income taxes at their full amount, with no federal SALT cap applied. On the federal side, the SALT cap rose from $10,000 to $40,000 starting in 2025 ($20,000 for married filing separately), with a phase-down for modified AGI above $500,000. For 2026, the cap becomes $40,400 and the income threshold $505,000.2Internal Revenue Service. How to Update Withholding to Account for Tax Law Changes for 2025 The DC adjustment still matters at these higher federal caps: if you paid $15,000 in DC property taxes and $12,000 in DC income taxes, your federal Schedule A blends them under the cap. Your DC return throws out the income taxes entirely and reclaims every dollar of property tax without a ceiling.
Mechanically, Calculation F tells you to start with total federal itemized deductions, subtract the SALT amount from Schedule A Line 7, then add back real estate taxes (Line 5b) and other non-income taxes (Line 6) at their uncapped amounts.3Office of the Chief Financial Officer. 2024 District of Columbia Individual Income Tax Forms and Instructions
Charitable Contributions Cap at 15% of AGI With No Carryforward
Federal rules generally allow charitable contributions up to 60% of AGI for cash gifts, with unused amounts carrying forward for five years. DC is far more restrictive. Charitable deductions are capped at 15% of adjusted gross income, and no carryforward is allowed.1D.C. Law Library. DC Code 47-1803.03 – Gross Income, Deductions
For a taxpayer with $150,000 in DC AGI, the maximum DC charitable deduction is $22,500 regardless of what the federal return allows. Any excess is lost on the DC side, permanently. If you are planning a large one-time gift such as appreciated stock, spreading the contributions across multiple tax years keeps more of them under the 15% ceiling.
The 5% Reduction for DC AGI Over $200,000
If your DC adjusted gross income exceeds $200,000 ($100,000 for married filing separately), DC reduces part of your itemized deductions by 5% of the amount over the threshold. A filer with $250,000 in DC AGI faces a $2,500 reduction (5% of the $50,000 excess).3Office of the Chief Financial Officer. 2024 District of Columbia Individual Income Tax Forms and Instructions
Three categories are exempt from the reduction:
- Medical and dental expenses
- Investment interest
- Casualty and theft losses
Everything else is subject to it: property taxes, mortgage interest, charitable contributions, and other miscellaneous items. Calculation F isolates the exempt categories, applies the 5% cut only to the non-exempt total, and then adds the exempt amounts back unreduced. If the reduction is larger than your non-exempt deductions, that group floors at zero; you never lose your medical, investment interest, or casualty deductions to this rule.3Office of the Chief Financial Officer. 2024 District of Columbia Individual Income Tax Forms and Instructions
Medical, Mortgage, and Investment Interest Follow Federal Rules
DC conforms to the federal treatment of medical and dental expenses. You deduct the portion of qualifying costs that exceeds 7.5% of AGI, using the same amount from federal Schedule A.4Internal Revenue Service. Topic No. 502 Medical and Dental Expenses Because medical expenses are also exempt from the 5% reduction, your DC medical deduction will match the federal figure in nearly every case.
Home mortgage interest also follows federal rules. Interest is deductible on up to $750,000 of mortgage debt incurred after December 15, 2017 ($375,000 for married filing separately), and up to $1 million for older loans. Investment interest expense is likewise limited to your net investment income for the year.1D.C. Law Library. DC Code 47-1803.03 – Gross Income, Deductions
One distinction matters at higher incomes: mortgage interest is subject to the 5% reduction, but investment interest is exempt. A filer with both should expect only the mortgage portion to shrink.
Calculation F, Step by Step
The D-40 instructions convert your federal itemized deductions into DC itemized deductions through Calculation F.3Office of the Chief Financial Officer. 2024 District of Columbia Individual Income Tax Forms and Instructions The logic:
Step 1. Rebuild the SALT deduction. Start with total federal itemized deductions from Schedule A, Line 17. Subtract the full state and local tax deduction on Line 7. Add back real estate taxes from Line 5b and other non-income taxes from Line 6 at their uncapped amounts. This is your base DC itemized deduction.
Step 2. Check DC AGI against the threshold. If DC AGI is $200,000 or less ($100,000 for married filing separately), the Step 1 figure is your final DC itemized deduction. Enter it on D-40, Line 18.
Step 3. Apply the 5% reduction if you are over the threshold. Separate the exempt deductions (medical from Schedule A Line 4, investment interest from Line 9, casualty losses from Line 15). Subtract these from the Step 1 total to isolate non-exempt deductions. Multiply the amount your DC AGI exceeds $200,000 by 5%. Reduce the non-exempt total by that number (floor of zero). Add the exempt deductions back unreduced. That final combined figure goes on D-40, Line 18.
Part-year DC residents use Calculation D, which follows the same logic but requires you to allocate each deduction to your DC residency period.
A Worked Example
You are a single DC resident with $260,000 in DC AGI. Your federal Schedule A shows $42,000 in total itemized deductions, including $8,500 in state income taxes and $9,200 in property taxes (the federal SALT total on Line 7 is $17,700). You also claimed $6,000 in medical expenses after the 7.5% floor, $18,000 in mortgage interest, and $8,300 in charitable gifts.
Subtract the $17,700 SALT amount from $42,000, leaving $24,300. Add back $9,200 in uncapped real estate taxes. Your base DC itemized deduction is $33,500.
Because your DC AGI exceeds $200,000, separate the $6,000 medical deduction. The non-exempt total is $27,500. Your 5% reduction is $3,000 (5% of $60,000 excess AGI). Reduced non-exempt deductions come to $24,500. Add back the $6,000 medical amount. Your final DC itemized deduction is $30,500.
Keep Your Records for at Least Three Years
DC can audit your return and assess additional tax within three years of the filing date. A return filed before the deadline is treated as filed on the deadline; a return filed on extension starts the three-year clock on the actual filing date. Hold onto receipts, mortgage interest statements, property tax bills, and charitable contribution records for at least three full years after filing.
Tax software will run Calculation F for you, but knowing what it is doing (income taxes stripped out, property taxes uncapped, charity capped at 15% of AGI, non-exempt deductions trimmed 5% above $200,000) lets you catch mistakes before an OTR notice arrives.