Yes. Although the District of Columbia is not a state, it does impose its own income tax that functions much like a state income tax. Residents pay DC income tax at rates ranging from 4% to 10.75% across seven brackets, administered by the DC Office of Tax and Revenue (OTR). Nonresidents who commute in from Maryland or Virginia generally do not owe DC tax on their wages.
DC Income Tax Rates
DC uses a progressive structure with seven brackets. The rates have been stable for tax years beginning after December 31, 2021:1Office of Tax and Revenue (DC). DC Individual and Fiduciary Income Tax Rates
- 4% on taxable income up to $10,000
- 6% on income from $10,001 to $40,000
- 6.5% on income from $40,001 to $60,000
- 8.5% on income from $60,001 to $250,000
- 9.25% on income from $250,001 to $500,000
- 9.75% on income from $500,001 to $1,000,000
- 10.75% on income over $1,000,000
DC allows a standard deduction and its own personal exemption, both adjusted annually for inflation. The federal code suspended the personal exemption through 2025, but DC did not follow suit. Current-year amounts appear in OTR’s D-40 instructions.
Who DC Treats as a Resident
Residency controls whether DC can tax you at all. Two tests apply, and meeting either one makes you a resident.
Domicile
Your domicile is your true, permanent home. You can have only one at a time, and it stays put until you clearly establish a new one and abandon the old. OTR weighs where you’re registered to vote, which jurisdiction issued your driver’s license, where your primary bank accounts sit, the address on your federal return, and where your children attend school.2Office of Tax and Revenue. Collections and Audit FAQs Changing a mailing address is not enough. If most indicators still point to DC, arguing you’ve left will be difficult.
The 183-Day Test
Even if your domicile is elsewhere, DC can treat you as a resident if you maintain a place to live in the District and spend 183 or more days here during the tax year. The count includes days of temporary absence while you still maintain the DC residence.2Office of Tax and Revenue. Collections and Audit FAQs If this describes you and you still want to claim non-residency, you carry the burden of proving your real domicile is somewhere else, so keep travel records and evidence of ties to the other jurisdiction.
Residents owe DC tax on their worldwide income, no matter where it was earned.
Maryland and Virginia Commuters
This is where DC surprises people. If you live in Maryland or Virginia and commute into DC for work, DC does not tax your wages. DC has reciprocity agreements with both neighbors. Virginia residents working in DC are exempt from DC tax on wages, and DC residents working in Virginia are exempt from Virginia tax on wages.3Virginia Department of Taxation. Reciprocity Maryland works similarly: DC residents working in Maryland are exempt from Maryland withholding on wages as long as they don’t live in Maryland more than six months of the calendar year.4Maryland Comptroller of Maryland. Personal Tax Tip #56 – When You Live in One State and Work in Another
If your employer withheld DC tax from your pay by mistake, file Form D-40B to get it back. The D-40B is for nonresidents whose only DC-source income was wages and salary, who commuted from their home state, and who did not maintain a place of residence in DC for 183 days or more.5Office of the Chief Financial Officer (OTR), District of Columbia. 2024 D-40B Nonresident Request for Refund The reciprocity rules only cover wages and salaries. Other DC-source income, such as rental income from a DC property, is treated separately.
Filing a DC Return
Residents who were required to file a federal return must also file a DC return on Form D-40, due April 15.6Office of Tax and Revenue. Individual Income Tax Filing The return reports your worldwide income, including wages earned in other states, investment income, and rental income.
Part-year residents (people who moved into or out of DC during the year) also file Form D-40 and prorate their standard deduction and applicable credits to reflect only the portion of the year they lived in DC.6Office of Tax and Revenue. Individual Income Tax Filing
Credit for Tax Paid to Another State
Because DC taxes your worldwide income, income earned in another state can look like it’s being taxed twice. DC addresses that with a credit for income taxes paid to other U.S. states, territories, or political subdivisions, claimed on Schedule U attached to your D-40.7Government of the District of Columbia. Schedule U – Additional Miscellaneous Credits and Contributions The credit is capped at the lesser of the tax you actually paid the other jurisdiction or the DC tax attributable to that same income, so it will not offset DC tax on income earned within DC. Foreign taxes are not eligible for this credit; those go on federal Form 1116 instead.
If You’re Self-Employed: A Second Tax
Freelancers, sole proprietors, and other unincorporated business operators face a second DC tax on top of their personal income tax. The Unincorporated Business Franchise Tax applies at a flat 8.25% on net income from any trade or business conducted in the District.8Office of Tax and Revenue. DC Business Franchise Tax Rates
If your business’s gross income exceeds $12,000 in a tax year, you must file Form D-30 even if you had no net income.9DC Office of Tax and Revenue. 2024 D-30 – DC Unincorporated Business Franchise Tax Forms and Instructions A minimum tax applies regardless of actual earnings: $250 if DC gross receipts are $1 million or less, and $1,000 if they exceed $1 million.8Office of Tax and Revenue. DC Business Franchise Tax Rates The franchise tax is deductible on your personal return, but a DC-based freelancer still needs to plan for both bills.
Estimated Payments and Penalties
If you expect to owe $100 or more in DC income tax after withholding and credits, you must make quarterly estimated payments using Form D-40ES.10DC.gov (Office of Tax and Revenue). D-40ES Estimated Payment for Individual Income Tax Booklet This mostly catches self-employed people, landlords with DC rental income, and anyone with significant investment income. A safe harbor lets you avoid the underpayment penalty by paying at least 110% of your prior year’s tax through withholding and estimates.
Missing the April 15 deadline or paying late triggers a penalty of 5% to 25% of the unpaid tax, plus interest of 10% per year compounded daily on unpaid balances.11Office of Tax and Revenue. Notice of Delinquency (TDI) If you can’t pay the full balance, file on time anyway. The failure-to-file penalty typically hurts more than the failure-to-pay penalty, and OTR offers payment plans for taxpayers who can’t pay in full.