Tool | October 2016

State-by-State Guide to Taxes on Retirees

Our comprehensive guide to taxes on retirement income, property and purchases, as well as special tax breaks for seniors, in every state.

District Of Columbia

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The Bottom Line
Map of District Of Columbia

Not Tax-Friendly

The District of Columbia can be expensive for retirees. Although the district exempts Social Security income, a steep 8.5% tax rate hits other income over $40,000. (The top income tax rate of 8.95% hits taxable income over $350,000.) Senior homeowners under certain income thresholds may qualify for property tax breaks.

State Sales Tax

5.75% (food, prescription and nonprescription drugs, and residential utility services are exempt).

Income Tax Range

Low: 4% (on taxable income up to $10,000)

High: 8.95% (on taxable income above $350,000)

Social Security

Benefits are not taxed.

Exemptions for Other Retirement Income

The district doesn't offer exemptions on other retirement income.

IRAs

Taxable at ordinary income tax rates.

401(k)s and Other Defined-Contribution Employer Retirement Plans

Taxable at ordinary income tax rates.

Private Pensions

Taxable at ordinary income tax rates.

Public Pensions

All state government pensions are fully taxed.

Property Taxes

A homestead deduction exempts the first $69,100 of assessed value from taxes. Several property tax relief programs are available to assist property owners and first-time home buyers. These include a homestead deduction, tax credits for historic properties and property-tax exemptions and deferrals. The median property tax on the District of Columbia's median home value of $486,900 is $2,614.

Tax breaks for seniors: Homeowners 65 and older with household adjusted gross income of less than $127,100 can qualify to reduce their property tax by 50%. Homeowners 65 and older whose adjusted gross income is less than $50,000 may qualify for property tax deferral.

Inheritance and Estate Taxes

There is no inheritance tax. Estates valued over $1 million are subject to estate tax. Starting in 2016, the exemption could have risen to $2 million, but additional revenue targets were not met. Once these targets are met, the exemption will increase. The exemption may gradually rise to match the federal exemption level, (possibly in 2018), but again the change will only occur if revenue targets are met. The top estate tax rate is 16%.