Research Areas
District of Columbia
The Facts on the District of Columbia's Tax Climate
Last updated July 1, 2009.
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 13 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 2009, D.C. taxpayers had to work until April 13 to pay their total tax bill-the same day as the national Tax Freedom Day. Neighboring states' Tax Freedom Days are: Delaware, April 11 (ranked 20th); Pennsylvania, April 14 (ranked 11th); West Virginia, April 1 (ranked 45th); Maryland, April 19 (ranked 5th); and Virginia, April 16 (ranked 6th).
Full study of Tax Freedom Day, nationwide and in each state
D.C.'s State/Local Tax Burden Above National Average
Estimated at 10.3% of income, D.C.'s state/local tax burden is above the national average of 9.7%. D.C. taxpayers pay $7,308 per capita in state and local taxes.
State-Local Tax Burdens, 1977-Present
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008
D.C.'s 2010 Business Tax Climate
D.C. ranks ahead of 13 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 (8th), Pennsylvania (27th), West Virginia (37th), Maryland (45th), and Virginia (15th).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth 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. In 2006 D.C.'s individual income tax collections were $2,111 per person.
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. Levies Sales Tax Slightly Below National Median
D.C. levies a 5.75% general sales or use tax on consumers, slightly below the national median of 6%.In 2006, the District collected $1,400 per capita in general sales taxes. D.C.'s gasoline tax stands at 20 cents per gallon, while its cigarette tax stands at $2.00 per pack of twenty.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales Tax Collections Per Capita and Per Household
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and 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
