Overview of District of Columbia Taxes
D.C.’s tax rate ranks the sixth highest in the country. The nation’s capital has a progressive income tax rate with six tax brackets ranging from 4% to 8.95%. Income tax brackets are the same regardless of marital status.
This calculator reflects the 2018 federal withholding tax changes.
Click here to learn more about how the Trump Tax Plan will affect you.
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Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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District of Columbia Paycheck Quick Facts
How Your D.C. Paycheck Works
D.C. residents will have federal income, FICA and district taxes taken out of each and every paycheck. Federal and FICA taxes go to the IRS, who then keeps some of it to go toward your annual income taxes and puts the rest toward Medicare and Social Security. Your employer withholds 1.45% of your paycheck for Medicare and 6.2% for Social Security. (Your employer also matches those Medicare and Social Security payments, so the total payments are double that.)
How much gets withheld from your paychecks depends on several factors, such as the frequency of those paychecks, allowances you claim, your marital status and how many jobs you have. If you are married but you and spouse decide to file separately, that will affect your taxes. If you have children or qualifying dependents, you might get more allowances. You’ll need to fill out a W-4 form every time you get a new job to help your employer determine how much should be taken out from each of your paychecks.
In December 2017, President Trump signed a new tax plan into law. The IRS has since released updated tax withholding guidelines and taxpayers should have seen changes to their paychecks, to reflect the new tax plan, starting in February 2018. For the time being, taxpayers do not need to fill out a new W-4. Employers will use the withholdings on your current form.
You might get more or less taxes taken out of your paychecks if you opt to contribute to pre-tax deductions. For example, many salaried employees are eligible for benefits that might lower your taxable income. Retirement accounts and transportation or medical spending accounts are examples of benefits you can contribute to prior to taxes and therefore your taxable income will be less.
Remember though, if you get less taxes withheld from every paycheck, you might end up being slapped with a bigger tax bill come April. Use the paycheck calculator to enter in different scenarios and see which allowances and/or deductions will affect how much taxes will get taken out.
District of Columbia Median Household Income
|Year||Median Household Income|
Luckily for D.C. residents, district taxes are fairly straightforward. Whether filing separately or jointly, all residents are taxed at the same rate and income brackets. Filers get taxed 4% on their first $10,000 of taxable income; 6% up to $40,000; 6.5% up to $60,000; 8.5% up to $350,000; 8.75% up to $1 million and 8.95% for taxable income that’s more than $1 million.
Also of note, if you were only a resident of D.C. part-time (as in not the entire calendar year), you still have a file a D.C. tax return as long as you lived there for at least 183 days. However, income you made when you weren’t living there doesn’t count toward district taxes.
If you are planning on becoming a resident of D.C. and will be purchasing a home with a mortgage, or if you are looking to refinance a property in the city, have a look at our mortgage guide. It breaks down important information about getting a mortgage in D.C.
Income Tax Brackets
|District Of Columbia Taxable Income||Rate|
|$0 - $10,000||4.00%|
|$10,000 - $40,000||6.00%|
|$40,000 - $60,000||6.50%|
|$60,000 - $350,000||8.50%|
|$350,000 - $1,000,000||8.75%|
How You Can Affect Your D.C. Paycheck
If you want to tweak your paycheck, look no further than your W-4 form. If you ended up paying a lot of taxes in April, you should check your W-4 and see how many allowances you are claiming.
If you think you’ll end up in the same situation again this year, you may want to adjust your paycheck by lowering your allowances or increasing your withholding.
Want to make it easy to increase your withholding? Just ask your employer to take a dollar amount out of each paycheck. All you do is write down how much you want taken out on the appropriate line on the W-4. It might look like a smaller paycheck, but think of it as paying taxes upfront so you’re not caught paying a large sum all at once come tax season. You also run the risk of facing underpayment penalties if you severely underpay taxes throughout the year.
On the other hand if you received a large refund in April, you may want to consider increasing your allowances. Life events like buying a new house, getting married or having more children are opportunities to change your withholding.
Another factor to consider is your pre-tax contributions. If your employer offers certain benefits like Health Savings Account or Flexible Spending Account, you can lower your taxable income by putting money in those. Also, consider sheltering more money in pre-tax retirement accounts like a 401(k) or 403(b) if your budget allows it. Because these contributions come out of your paycheck before taxes are taken out, they can help decrease how much you pay in taxes.
District of Columbia Top Income Tax Rate
|Year||Top Income Tax Rate|
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2016 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics