D.C. Poised to Have Area’s Lowest Sales Tax for First Time in 45 Years

September 20, 2013

Joseph Bishop-Henchman

Joseph Bishop-Henchman

On October 1, 2013, the District of Columbia sales and use tax will drop from 6 percent to 5.75 percent. The tax cut brings the rate back to where it was before a recession-induced tax increase in 2010. (The 10 percent meals tax, 18 percent parking tax, 12 percent tobacco tax, and 14.5 percent hotel tax will not change.)

What may surprise most people is that, with this change, Washington, D.C. will now have a lower sales tax than both neighboring northern Virginia and Maryland (both 6 percent). This is only the second time in history that this has happened (1968 was the other, see table), and challenges the common conception of high-tax DC next to low-tax Virginia. While DC is cutting its sales tax, Maryland will retain a 2008 sales tax increase from 5 percent to 6 percent pushed through by Gov. Martin O'Malley (D), and Virginia Gov. Bob McDonnell (R) pushed through a transportation bill that boosted the combined state and local sales tax in northern Virginia to 6 percent, as of July 1, 2013.

Table: Sales Tax Rates in the District of Columbia, Virginia, and Maryland, 1965-present

Year

D.C. sales tax

Virginia sales tax rate (inc. local tax in Northern Virginia)

Maryland sales tax rate

1965

3%

None

3%

1966

3%

3%

3%

1967

3%

3%

3%

1968

3%

4%

4%

1969

4%

4%

4%

1970

4%

4%

4%

1971

4%

4%

4%

1972

4%

4%

4%

1973

5%

4%

4%

1974

5%

4%

4%

1975

5%

4%

4%

1976

5%

4%

4%

1977

5%

4%

5%

1978

5%

4%

5%

1979

5%

4%

5%

1980

5%

4%

5%

1981

6%

4%

5%

1982

6%

4%

5%

1983

6%

4%

5%

1984

6%

4%

5%

1985

6%

4%

5%

1986

6%

4.5%

5%

1987

6%

4.5%

5%

1988

6%

4.5%

5%

1989

6%

4.5%

5%

1990

6%

4.5%

5%

1991

6%

4.5%

5%

1992

6%

4.5%

5%

1993

6%

4.5%

5%

1994

5.75%

4.5%

5%

1995

5.75%

4.5%

5%

1996

5.75%

4.5%

5%

1997

5.75%

4.5%

5%

1998

5.75%

4.5%

5%

1999

5.75%

4.5%

5%

2000

5.75%

4.5%

5%

2001

5.75%

4.5%

5%

2002

5.75%

4.5%

5%

2003

5.75%

4.5%

5%

2004

5.75%

5%

5%

2005

5.75%

5%

5%

2006

5.75%

5%

5%

2007

5.75%

5%

5%

2008

5.75%

5%

6%

2009

5.75%

5%

6%

2010

6%

5%

6%

2011

6%

5%

6%

2012

6%

5%

6%

2013 (as of Oct. 1)

5.75%

6%

6%

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