District of Columbia

The Facts on the District of Columbia's Tax Climate

Here are some basic facts on Washington, D.C.'s tax system and how it compares to the 50 states:

Tax Freedom Day Arrives on April 16 in D.C.
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2011, D.C. taxpayers work until April 16 to pay their total tax bill- 4 days later than the national Tax Freedom Day. Neighboring states' Tax Freedom Days are: Delaware, April 10 (21st); Pennsylvania, April 14 (ranked 13th); West Virginia, March 31 (ranked 44th); Maryland, April 17 (ranked 4th); and Virginia, April 12 (ranked 14th).
Full study of Tax Freedom Day, nationwide and in each state

D.C.'s State and Local Tax Burden Below National Average
 D.C.'s 2009 state and local tax burden of 9.6% of income is below the national average of 9.8%. D.C.'s tax burden has decreased overall from 11.5% (7th nationally) in 1977 to 9.6% (24th nationally) in 2009. D.C. taxpayers pay $6,076 per capita in state and local taxes.
State-Local Tax Burdens, 1977-Present
Map of U.S. Showing all State's Burdens and Ranks
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2009

D.C.'s 2012 Business Tax Climate

D.C. ranks ahead of 10 states in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales and gross receipts taxes; unemployment insurance taxes; and taxes on wealth, including residential and commercial property. Neighboring states ranked as follows: Delaware (12th), Pennsylvania (19th), West Virginia (23rd), Maryland (42nd), and Virginia (26th).

50-State Comparison of Business Tax Climates (data only)
2012 State Business Tax Climate Index, Ninth Edition (full study)

D.C.'s Individual Income Tax System
D.C.'s individual income tax system consists of three separate brackets with a top rate of 8.5%, kicking in at an income level of $40,000.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

D.C.'s Corporate Income Tax System
D.C.'s corporate tax structure consists of a single rate of 9.975% on all income, with a minimum tax of $100.
50-State Table of Corporate Income Tax Rates
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household
50-State Table of State Corporate Income Tax Collections Per Capita

D.C. Sales and Excise Taxes
D.C. levies a 6% general sales or use tax on consumers, just above the national median of 5.85%. In 2007 D.C.'s general and selective sales tax collections were $2,273 per person. The gasoline tax stands at 23.5 cents per gallon, while its cigarette tax stands at $2.50 per pack of twenty.
50-state table of sales, cigarette, gas, beer, wine, and spirits tax rates.
50-State Table of State and Local General and Selective Sales Tax Collections Per Capita

D.C.'s Property Tax System
D.C.'s local government collected $2,078.97 per capita in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: D.C. is a Net Beneficiary
D.C. taxpayers receive more in federal funding per dollar of federal taxes paid than any of the 50 states. Per dollar of Federal tax collected in 2005, D.C. citizens received approximately $5.55 in the way of federal spending. This ranks the District highest nationally by a wide margin. Neighboring states and what they received in federal spending per dollar of federal tax collected was: Delaware ($0.77), Pennsylvania ($1.07), West Virginia ($1.76), Maryland ($1.30), and Virginia ($1.51).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

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