Flat-Fee Tax Preparation for Washington DC Residents

Washington DC has a graduated income tax with rates from 4% to 10.75% — the top rate of 10.75% applies to income over $1M, creating a high-bracket burden comparable to NY for top earners

DC residents who work in Maryland or Virginia pay only DC income tax under the reciprocity agreement — DC does not tax non-resident wages from out-of-state employment

DC's Unincorporated Business Franchise Tax (UBFT) at 8.25% applies to self-employment income and unincorporated businesses operating in DC — often a significant tax for solo practitioners and small partnerships

DC imposes a real estate transfer tax of 1.1% (buyer) + 1.1% (seller) = 2.2% total on residential transactions up to $400,000, with higher rates on transactions over $400,000

DC does not impose a separate estate tax but is one of the highest-income-tax jurisdictions in the US — federal estate tax planning is the primary wealth transfer tool

Short-term rental operators in DC face DC sales tax and hotel tax on gross rental revenue, plus DC short-term rental registration requirements

The DC Opportunity Zones (several DC areas were designated) create federal capital gains deferral opportunities for investors in qualifying DC real estate

DC's income tax on pass-through entities means DC business owners should evaluate the DC PTET option to address the SALT cap

Washington DC Real Estate Tax

Washington DC's real estate market is one of the most resilient in the US, driven by federal government and professional services demand. DC's combined 2.2%+ transfer tax is among the highest for residential transactions, and the DC Opportunity Zone designations create tax deferral opportunities in certain neighborhoods. The top DC income tax rate of 10.75% makes strategic planning for real estate gains especially important.

Washington DC Business Tax

DC businesses and professionals face a high income tax burden, the UBFT on unincorporated businesses, and complex multi-jurisdiction compliance for the DC/MD/VA metro. The PTET election provides SALT cap relief for pass-through businesses. Many DC professionals have income that approaches or exceeds the 10.75% bracket, making federal and DC optimization particularly high-value.

Do I need to file a Washington DC tax return?

If you are a DC domiciliary (DC is your permanent home) or earned DC-source income above the filing threshold, you must file a DC D-40. DC residents are taxed on worldwide income at rates up to 10.75%. If you are a DC resident who works in Maryland or Virginia, you pay only DC income tax on your wages — not MD or VA tax — under the reciprocity arrangement.

What is DC's Unincorporated Business Franchise Tax?

DC imposes the UBFT at 8.25% on the net income of unincorporated businesses — including sole proprietorships, partnerships, and LLCs — doing business in DC. If you are self-employed or a partner in a DC firm, you may owe both the DC individual income tax on your pass-through income and the UBFT at the entity level. The UBFT can significantly increase the total DC tax burden for self-employed professionals and small business owners operating in DC.

How does the DC/MD/VA reciprocity work for DC residents?

DC, Maryland, and Virginia have a reciprocity agreement for income tax on wages. A DC resident who earns wages in Maryland or Virginia pays income tax only to DC — not to MD or VA. Similarly, MD and VA residents who earn wages in DC pay only their home state's income tax. The reciprocity covers wages only — if you have rental income, business income, or other DC-source income beyond wages, the usual sourcing rules apply.

What are the real estate transfer taxes in DC?

DC imposes a real estate transfer tax on both the buyer (1.1%–1.45%) and the seller (1.1%–1.45%) — total transfer tax of 2.2%–2.9% depending on the transaction value. For transactions over $400,000, the rate is 1.45% per side (2.9% total). This is among the highest real estate transfer tax burdens in the mid-Atlantic region and must be factored into DC real estate deal economics.