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DC families earning up to $250k have a lower than average tax burden compared to neighboring jurisdictions

Susan Steward
Wednesday, September 4, 2024 - 4:00pm

We recently released our annual tax burden study for the DC metro area, which compares the state and local taxes a hypothetical family of three would pay in DC and surrounding jurisdictions. This year’s report covers taxes from tax year 2022.

We calculate the income, property, auto, and sales taxes a hypothetical family would pay at household incomes of $35,000, $50,000, $75,000, $100,000, $150,000, and $250,000. The income levels of $35,000 and $250,000 are new in this year’s report; in previous years, the lowest income we analyzed was $25,000, and the highest was $150,000.

Our main findings include:

· A hypothetical family in DC had a lower total tax burden (income, property, auto, and sales tax combined) than the average of surrounding jurisdictions for all income levels we analyzed.

Grouped bar chart titled 'DC's Combined Tax Burdens Compared with Average of Other Metro Area Jurisdictions, 2022.' Green bars represent DC and blue bars represent the Metro Area Average, shown at six income levels. At $35,000/year: DC $2,741 vs. Metro Average $5,507. At $50,000/year: DC $3,524 vs. $5,228. At $75,000/year: DC $6,099 vs. $8,668. At $100,000/year: DC $9,163 vs. $11,589. At $150,000/year: DC $15,099 vs. $15,827. At $250,000/year: DC $25,757 vs. $25,960. DC's combined tax burden is lower than the metro average at all income levels, with the largest gap at lower incomes. Source: ORA.

· The total tax burden (income, property, auto, and sales taxes combined) for families with incomes up to $100k was lower in DC than in all other surrounding jurisdictions.

o For a family with a $150k income, the total tax burden in DC was 6th highest out of 8 jurisdictions.

o For a family with a $250k income, the total tax burden in DC was 4th highest out of 8 jurisdictions.

· Income tax: Compared to surrounding jurisdictions, DC had the lowest burden for the lowest income family analyzed ($35,000 income), and the 3rd highest burden out of 8 jurisdictions for the highest income family analyzed ($250,000 income).

Grouped bar chart titled '2022 Washington Metropolitan Area Individual Income Tax Burdens' comparing individual income tax burdens across eight jurisdictions at six income levels ($35K, $50K, $75K, $100K, $150K, $250K). Jurisdictions include Montgomery Co MD, Prince George's Co MD, Washington DC (highlighted in green), Fairfax Co VA, Fairfax City VA, Alexandria VA, Arlington VA, and Falls Church VA. Washington DC shows negative income tax burdens at $35,000 (-$1,268) due to refundable tax credits, $1,248 at $50K, $2,793 at $75K, $4,700 at $100K, $8,837 at $150K, and $15,970 at $250K — generally lower than Maryland jurisdictions. Source: ORA.

· Property tax: DC had the lowest property tax burden compared to all surrounding jurisdictions for all income levels we analyzed.

o In addition to having the lowest property tax rate of jurisdictions analyzed, DC also offers the homestead deduction and Schedule H tax credit.

Grouped bar chart titled '2022 Washington Metropolitan Area Real Property Tax Burdens' comparing property tax burdens across eight jurisdictions at six income levels ($35K PTER, $50K, $75K, $100K, $150K, $250K). Washington DC (highlighted in green) shows the lowest property tax burdens among all jurisdictions at most income levels: $2,739 at $35K, $774 at $50K, $1,485 at $75K, $2,197 at $100K, $3,619 at $150K, and $6,465 at $250K — significantly below other metro area jurisdictions, which show $3,989 across most income levels at $35K. Source: ORA. Note: A refundable renter's property tax credit (Schedule H) is included for DC renters.

· Sales tax: DC had the highest sales tax burden compared to all surrounding jurisdictions for all income levels we analyzed

· Auto tax: DC had the lowest property tax burden compared to all surrounding jurisdictions for all income levels we analyzed.

· In addition to the tax burden calculations, our report includes comparisons of tax rates in the DC metro area, including those for alcoholic beverages, gas, cigarettes, financial institutions, inheritances and estates, unincorporated business franchises, and more.

Read the full study or browse our complete list of tax burden studies