-
Overall Rank
47*
-
39*
-
45*
-
44*
-
46*
-
Unemployment Insurance Tax Rank
24*
The District of Columbia ranks 47th* overall on the 2027 State Tax Competitiveness Index.
Score 4.17 / 10
*DC's rank does not affect the states' ranks.
About District of Columbia's Tax Code
The District of Columbia’s tax code includes all major tax types and has traditionally ranked among the bottom 10 on the Index, though it has a “phantom” rank and does not affect the ranks of the 50 states. Washington, DC, has a highly progressive individual income tax with seven tax brackets, a top marginal rate of 10.75 percent, and no adjustment of tax brackets for inflation—especially damaging in a jurisdiction that is prohibited from taxing nonresidents’ income by federal law, meaning that DC workers can benefit from lower income taxes by moving to Virginia or Maryland even if they continue to work in DC.
The District of Columbia’s corporate income tax has a relatively high rate of 8.25 percent, comparable to Maryland but considerably higher than Virginia. The District does not impose gross receipts or capital stock taxes, but has a throwback rule and includes net CFC tested income (NCTI), which replaced global intangible low-taxed income (GILTI), in its corporate tax base, potentially increasing tax liability for companies with foreign operations. Additionally, the District does not allow Section 168(k) expensing for C corporations, and the District caps small business expensing under Section 179 at $25,000.
The District of Columbia also has one of the highest property tax burdens in the nation. In addition to real property, it taxes personal property but provides a generous de minimis exemption of $225,000 for small and medium-sized businesses. This exemption, however, is the only one in the nation that is exclusively a liability exemption and not a filing exemption, forcing small businesses to bear all the compliance costs even if they have no liability due to the exemption. Washington, DC, also imposes an estate tax with a maximum rate of 16 percent and an exemption of approximately $5 million, well below the current federal threshold.
Component Scores
#47* overall · 4.17 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #39* | 4.76 / 10 | |
| Individual Income Taxes | #45* | 3.87 / 10 | |
| Sales Taxes | #44* | 3.94 / 10 | |
| Property Taxes | #46* | 3.53 / 10 | |
| Unemployment Insurance Taxes | #24* | 5.17 / 10 |
Ranking Changes, 2020–2027
#47* in 2027 · unchanged from 2020The District of Columbia ranked 47th in 2020 and ranks 47th in 2027, no net change. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology. DC's rank does not affect the states' ranks.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 47* (4.32) | 33* (5.01) | 46* (4.01) | 43* (3.92) | 43* (3.88) | 22* (5.21) |
| 2021 | 47* (4.30) | 33* (5.02) | 45* (4.03) | 43* (3.94) | 46* (3.70) | 22* (5.19) |
| 2022 | 48* (4.26) | 33* (5.02) | 46* (4.06) | 44* (3.91) | 47* (3.52) | 27* (5.05) |
| 2023 | 48* (4.06) | 33* (4.98) | 48* (3.71) | 44* (3.88) | 50* (3.01) | 28* (5.04) |
| 2024 | 48* (4.01) | 33* (4.97) | 48* (3.66) | 44* (3.89) | 50* (2.73) | 23* (5.18) |
| 2025 | 48* (4.06) | 33* (4.95) | 47* (3.69) | 45* (3.89) | 49* (3.09) | 25* (5.13) |
| 2026 | 48* (4.15) | 34* (4.92) | 47* (3.72) | 45* (3.90) | 47* (3.45) | 24* (5.19) |
| 2027 | 47* (4.17) | 39* (4.76) | 45* (3.87) | 44* (3.94) | 46* (3.53) | 24* (5.17) |
District of Columbia Compared across the States
#47* overallEach row places the states on a 0 to 10 score scale for one measure. District of Columbia is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#47* 4.17
Corporate Taxes
#39* 4.76
Individual Income Taxes
#45* 3.87
Sales Taxes
#44* 3.94
Property Taxes
#46* 3.53
Unemployment Insurance Taxes
#24* 5.17
- District of Columbia
- Other states, by rank (1st to 50th)
- 50-state median
District of Columbia and Its Neighbors
#47* overallThe District of Columbia borders 2 states and ranks 47th* overall. Its rank does not affect theirs, so they are not compared place by place.
What Each Component Includes
The five components of the Index, what each one covers, and where District of Columbia lands. Open any component for the full breakdown.
-
Corporate Taxes
Rank #39*Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for District of Columbia → -
Individual Income Taxes
Rank #45*Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for District of Columbia → -
Sales Taxes
Rank #44*Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for District of Columbia → -
Property Taxes
Rank #46*Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for District of Columbia → -
Unemployment Insurance Taxes
Rank #24*Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for District of Columbia →
Tax Data Explorer
Every policy variable behind District of Columbia's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
153 data points · Shaded values differ from District of Columbia
Corporate Taxes: Corporate Income Tax Rates
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Bracket 1 | 8.25% > $0 | 8.25% > $0 | 6.0% > $0 (differs) |
| Gross Receipts Tax | No | No | No |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Job Credits | Yes | Yes | No (differs) |
| Research and Development Credits | No | Yes (differs) | Yes (differs) |
| Investment Credits | No | No | No |
| Compensation Expenses Deductible | n.a. | n.a. | n.a. |
| Cost of Goods Sold Deductible | n.a. | n.a. | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Conforms to Federal NOL Treatment | Yes | Yes | Yes |
| Carryback (Years) | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment |
| Carryback Cap | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment |
| Carryforward (Years) | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment |
| Carryforward Cap | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment |
Corporate Taxes: Treatment of Capital Investment
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Section 168(k) Expensing | 0% | 0% | 0% |
| Conforms to Section 163(j) Limitation | Yes | Yes | Yes |
| GILTI Inclusion | 50% Inclusion | 50% Inclusion | Decouples (differs) |
| Section 174 Expensing | No | Yes (differs) | No |
| Section 168(n) Expensing | No | No | No |
Corporate Taxes: Other Corporate Base Variables
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes |
| Conformity Status | Rolling | Rolling | Static (current) (differs) |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes |
| Allows Federal Depletion | Yes | Partial (differs) | Yes |
| Throwback Rule | Yes | No (differs) | No (differs) |
| Foreign Tax Deductibility | Partial | Yes (differs) | No (differs) |
| Corporate AMT | No | No | No |
| Brackets Indexed for Inflation | Flat CIT | Flat CIT | Flat CIT |
Individual Income Taxes: Individual Income Tax Rates
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Bracket 1 | 4.0% > $0 | 2.0% > $0 (differs) | 2.0% > $0 (differs) |
| Bracket 2 | 6.0% > $10,000 | 3.0% > $1,000 (differs) | 3.0% > $3,000 (differs) |
| Bracket 3 | 6.5% > $40,000 | 4.0% > $2,000 (differs) | 5.0% > $5,000 (differs) |
| Bracket 4 | 8.5% > $60,000 | 4.75% > $3,000 (differs) | 5.75% > $17,000 (differs) |
| Bracket 5 | 9.25% > $250,000 | 5.0% > $100,000 (differs) | n.a. (differs) |
| Bracket 6 | 9.75% > $500,000 | 5.25% > $125,000 (differs) | n.a. (differs) |
| Bracket 7 | 10.75% > $1,000,000 | 5.5% > $150,000 (differs) | n.a. (differs) |
| Bracket 8 | n.a. | 5.75% > $250,000 (differs) | n.a. |
| Bracket 9 | n.a. | 6.25% > $500,000 (differs) | n.a. |
| Bracket 10 | n.a. | 6.5% > $1,000,000 (differs) | n.a. |
| Standard Deduction (Single Filer) | $16,100 | $3,350 (differs) | $8,750 (differs) |
| Personal Exemption (Single Filer) | n.a. | $3,200 (differs) | $930 (differs) |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | n.a. |
| Personal Exemption per Dependent | n.a. | $3,200 (differs) | $930 (differs) |
| Personal Exemption Credit per Dependent | n.a. | n.a. | n.a. |
| Average Local Income Tax Rate | None | 3.20% (differs) | None |
| Surtaxes on Wage Income | n.a. | n.a. | n.a. |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Marriage Penalty | Yes | Yes | Yes |
| Married Couples Can File Separately on One Return | Yes | No (differs) | No (differs) |
| Convenience Rule | No | No | No |
| Interest Taxed | Yes | Yes | Yes |
| Dividends Taxed | Yes | Yes | Yes |
| Capital Gains Taxed | Yes | Yes | Yes |
| Combined Capital Gains Tax Rate | 10.75% | 11.7% (differs) | 5.75% (differs) |
| Tax Brackets Indexed for Inflation | No | No | No |
| Standard Deduction Indexed for Inflation | Yes | Yes | No (differs) |
| Personal Exemption Indexed for Inflation | Yes | No (differs) | No (differs) |
| Progressivity Ratio | 1.26 | 1.37 (differs) | 1.00 (differs) |
Individual Income Taxes: Other Individual Base Variables
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes |
| Conformity Status | Rolling | Rolling | Static (current) (differs) |
| Credits for Taxes Paid to Other States | Yes | Yes | Yes |
| AMT Levied | No | No | No |
| Recognition of S Corporation Status | No | Yes (differs) | Yes (differs) |
| Section 179 Expensing Limit | $25,000 | $25,000 | $1,250,000 (differs) |
| Tips | Taxable | Taxable | Taxable |
| Overtime | Taxable | Taxable | Taxable |
| Filing and Withholding Threshold Index | 10 | 0 (differs) | 0 (differs) |
Individual Income Taxes: Other Individual Income Variables
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Income Recapture | No | No | No |
Sales Taxes: Sales and Excise Tax Rates
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| State Sales Tax Rate | 6.00% | 6.00% | 5.30% (differs) |
| Average Local Sales Tax Rate | 0.00% | 0.00% | 0.47% (differs) |
| Maximum Local Sales Tax Rate | None | None | 2.70% (differs) |
| Gasoline Tax (Cents per Gallon) | 35.70 | 46.81 (differs) | 42.40 (differs) |
| Diesel Tax (Cents per Gallon) | 35.7 | 47.66 (differs) | 43.5 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $5.07 | $5.00 (differs) | $0.60 (differs) |
| Beer Tax (Dollars per Gallon) | $0.79 | $0.60 (differs) | $0.2565 (differs) |
| Spirits Tax (Dollars per Gallon) | $6.68 | $5.46 (differs) | $23.47 (differs) |
| Vapor Tax Ratio to Cigarette Tax | 167.4667% | 214.305% (differs) | 11.00% (differs) |
Sales Taxes: Business-to-Business Exemptions
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | Some Taxable |
| Farm Equipment | Taxable | Exempt (differs) | Exempt (differs) |
| Office Equipment | Taxable | Taxable | Taxable |
| Manufacturing Machinery | Taxable | Exempt (differs) | Exempt (differs) |
| Manufacturing Raw Materials | Exempt | Exempt | Exempt |
| Business Fuel and Utilities | Exempt | Exempt | Exempt |
| Business Leases and Rentals | Taxable | Taxable | Taxable |
| Information Services | Taxable | Taxable | Exempt (differs) |
| Software as a Service (SaaS) | Taxable | Partial (differs) | Exempt (differs) |
| Platform as a Service (PaaS) | Taxable | Partial (differs) | Exempt (differs) |
| Digital B2B Products | Taxable | Taxable | Exempt (differs) |
| Payroll Services | Taxable | Exempt (differs) | Exempt (differs) |
| Data Center Purchases | Taxable | Exempt (differs) | Exempt (differs) |
| Digital Advertising Tax | No | Yes (differs) | No |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Groceries | Exempt | Exempt | Local Tax Only (differs) |
| Clothing | Taxable | Taxable | Taxable |
| Prescription Medication | Exempt | Exempt | Exempt |
| Nonprescription Medication | Exempt | Exempt | Exempt |
| Gasoline | Exempt | Exempt | Exempt |
| Landscaping | Taxable | Exempt (differs) | Exempt (differs) |
| Repair Services | Taxable | Exempt (differs) | Exempt (differs) |
| Real Estate Services | Exempt | Exempt | Exempt |
| Parking | Taxable | Exempt (differs) | Exempt (differs) |
| Dry Cleaning | Taxable | Exempt (differs) | Exempt (differs) |
| Fitness Services | Taxable | Exempt (differs) | Exempt (differs) |
| Barber Services | Exempt | Exempt | Exempt |
| Veterinary Services | Exempt | Exempt | Exempt |
| E-Books | Taxable | Taxable | Exempt (differs) |
| Streaming Video | Taxable | Taxable | Exempt (differs) |
| Medical Services | Exempt | Exempt | Exempt |
| Legal Services | Exempt | Exempt | Exempt |
| Financial Services | Exempt | Exempt | Exempt |
| Accounting Services | Exempt | Exempt | Exempt |
| Sales Tax Holiday | No | Yes (differs) | Yes (differs) |
Sales Taxes: Sales Tax Structure
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | Yes |
| Unified Tax Administration | Yes | Yes | Yes |
| Safe Harbor for Remote Sellers | Sales or Transactions Threshold | Sales or Transactions Threshold | Sales or Transactions Threshold |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Property Tax Collections per Capita | $4,458 | $1,982 (differs) | $2,296 (differs) |
| Property Tax as a Percentage of Personal Income | 3.95% | 2.49% (differs) | 2.97% (differs) |
| Assessment Limit | Yes | Yes | No (differs) |
| Levy Limit | Yes | No (differs) | No (differs) |
| Capital Stock Tax Rate | None | None | None |
| Capital Stock Tax Maximum Payment | n.a. | n.a. | n.a. |
| Payment Options for Capital Stock and Corporate Income Taxes | n.a. | n.a. | n.a. |
Property Taxes: Property Tax Bases
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Tangible Personal Property Tax | Yes | Yes | Yes |
| Tangible Personal Property De Minimis Exemption | $225,000 | $20,000 (differs) | None (differs) |
| Intangible Property Tax | No | No | No |
| Inventory Tax | No | Partial (differs) | Partial (differs) |
| Real Estate Transfer Tax | Yes | Yes | Yes |
| Split Roll | Yes | No (differs) | No (differs) |
| Split Roll Ratio | 1.94 | 1.00 (differs) | 1.00 (differs) |
| Estate Tax | 16% | 16% | No (differs) |
| Inheritance Tax | No | 10% (differs) | No |
| Gift Tax | No | No | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Minimum Rate | 2.10% | 0.31% (differs) | 0.10% (differs) |
| Maximum Rate | 7.60% | 7.50% (differs) | 6.20% (differs) |
| Taxable Wage Base | $9,000 | $8,500 (differs) | $8,000 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.10% | 0.30% (differs) | 0.00% (differs) |
| Most Favorable Schedule: Maximum Rate | 5.40% | 7.50% (differs) | 5.40% |
| Least Favorable Schedule: Minimum Rate | 1.90% | 2.20% (differs) | 0.10% (differs) |
| Least Favorable Schedule: Maximum Rate | 7.40% | 13.50% (differs) | 6.20% (differs) |
| Employer Contributions as a Share of Total Wages | 0.22% | 0.18% (differs) | 0.08% (differs) |
| Employer Contributions as a Share of Taxable Wages | 2.21% | 1.33% (differs) | 0.56% (differs) |
| Trust Fund Solvency Ratio | 0.68 | 1.04 (differs) | 0.71 (differs) |
| New Employer Rate | 2.70% | 1.00% (differs) | 2.73% (differs) |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Experience Formula Based On | Reserve Ratio | Benefits Ratio (differs) | Benefits Ratio (differs) |
| Benefits Charged in Proportion to Base-Period Wages | Yes | Yes | No (most recent or principal employer) (differs) |
| Charged If Employee's Benefit Award Is Reversed | Yes | No (differs) | Yes |
| Charged for Reimbursements on Combined Wage Claims | Yes | Yes | No (differs) |
| Charged If Employee Left Voluntarily | No | No | Yes (differs) |
| Charged If Employee Was Discharged for Misconduct | No | No | Yes (differs) |
| Charged If Employee Refused Suitable Work | Yes | Yes | Yes |
| Charged If Employee Continues to Work Part-Time | No | No | Yes (differs) |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | District of Columbia | Maryland | Virginia |
|---|---|---|---|
| Solvency Tax | No | No | Yes (differs) |
| Taxes for Socialized Costs or Negative Balance Employers | No | No | Yes (differs) |
| Loan and Interest Repayment Surtaxes | Yes | No (differs) | No (differs) |
| Reserve Taxes | No | No | No |
| Surtaxes for UI Administration or Non-UI Purposes | Yes | Yes | No (differs) |
| Temporary Disability Insurance | No | No | No |
| Voluntary Contributions | No | No | No |
| Years to Qualify for Experience Rating | 3 | 2 (differs) | 1 (differs) |
Share This Page
About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Media Contacts
Sarah Wilbur
Sarah Wilbur is Communications Manager at the Tax Foundation where she advances the organization’s institutional reach by developing its corporate communications and media programs.
Jesse Solis
Jesse Solis is Vice President of Communications at the Tax Foundation, where he leads the communications team and works to build coverage of Tax Foundation’s experts and their work across the globe. He joined the team in 2021 as Communications Manager and became Communications Director in 2024.