Income Tax Comparison: DC vs. Virginia

Washington D.C. and Virginia’s close proximity means thousands of people cross the border between them daily for work, making the choice of residence a decision with major tax implications. Understanding the differences between D.C. and Virginia’s income tax systems is an important part of deciding where to live and work in the area.

This article compares the income tax systems in the District of Columbia and Virginia, covering tax rates, deductions, and credits. The information presented is for general informational purposes and not tax advice. Taxpayers should consult with a qualified professional for advice tailored to their individual circumstances.

Comparing Income Tax Rates and Brackets

Both Washington D.C. and Virginia use a progressive tax system where income is divided into brackets, and higher portions of income are taxed at higher rates.

The District of Columbia has a more steeply progressive tax structure with more brackets and a higher top rate compared to Virginia. For the 2024 tax year, D.C.’s rates begin at 4% and climb to 10.75% for the highest earners. This structure results in a lower tax liability for low-income earners compared to Virginia, but a higher one for high-income individuals.

Virginia’s system has fewer brackets and a flatter structure. For the 2024 tax year, Virginia’s rates start at 2% and top out at 5.75% on income over $17,000. A large portion of middle and upper-income earners in Virginia will find most of their income taxed at this top marginal rate.

Below are the 2024 tax brackets for single filers.

District of Columbia – 2024 Tax Brackets (Single)

| Tax Rate | Taxable Income |
| :— | :— |
| 4.00% | $0 to $10,000 |
| 6.00% | $10,001 to $40,000 |
| 6.50% | $40,001 to $60,000 |
| 8.50% | $60,001 to $250,000 |
| 9.25% | $250,001 to $500,000 |
| 10.25% | $500,001 to $1,000,000 |
| 10.75% | Over $1,000,000 |

Virginia – 2024 Tax Brackets (Single)

| Tax Rate | Taxable Income |
| :— | :— |
| 2.00% | $0 to $3,000 |
| 3.00% | $3,001 to $5,000 |
| 5.00% | $5,001 to $17,000 |
| 5.75% | Over $17,000 |

For those who are married and filing a joint return, the income thresholds for the brackets are doubled in both jurisdictions.

Analysis of Deductions

Before tax rates are applied, income is reduced by deductions to determine taxable income. Taxpayers can take the standard deduction, which is a fixed dollar amount, or itemize their deductions by summing up specific, eligible expenses.

For the 2024 tax year, the District of Columbia offers a standard deduction of $14,600 for single filers and $29,200 for those married filing jointly. Virginia’s standard deduction for the same year is lower, at $8,500 for single filers and $17,000 for married couples filing jointly.

Both D.C. and Virginia follow federal rules for itemized deductions, allowing for the deduction of expenses like mortgage interest, charitable contributions, and medical expenses above a certain threshold. The federal State and Local Tax (SALT) deduction is capped at $10,000 per household. Neither jurisdiction offers a workaround to this federal cap for personal income tax filings.

Key Tax Credits and Exemptions

A tax credit reduces your actual tax liability on a dollar-for-dollar basis. Both D.C. and Virginia offer various tax credits that can lower a final tax bill.

The District of Columbia provides a D.C. Earned Income Tax Credit (EITC) for low- and moderate-income workers. For the 2024 tax year, the D.C. EITC is worth 70% of the federal EITC. Another D.C. credit is the Schedule H Property Tax Credit, available to both homeowners and renters who meet certain income requirements. For 2024, the maximum credit is $1,375 and is available to residents with federal adjusted gross income up to $63,900, or $87,100 for those 70 and older.

Virginia provides its own version of the Earned Income Tax Credit. Taxpayers can choose between a refundable credit equal to 15% of their federal credit or a non-refundable credit equal to 20% of their federal credit.

Residency and Filing Requirements

Residency status governs where and how you file taxes. Full-year residents of either D.C. or Virginia must file an income tax return in their home jurisdiction, reporting all income regardless of where it was earned. Individuals who move between Virginia and D.C. during the tax year are considered part-year residents in both and must file returns for each, reporting the income earned while living in that location.

A Virginia resident who works in the District of Columbia is not subject to D.C. income tax. Due to federal law prohibiting D.C. from taxing the income of nonresidents, the Virginia resident files and pays income tax only to Virginia. Their D.C. employer should withhold Virginia taxes.

A D.C. resident who works in Virginia must file two returns. Because Virginia taxes income earned within its borders, the individual must file a nonresident Virginia return to report those wages. They must also file a D.C. resident return reporting all their income. To prevent double taxation, D.C. allows its residents to claim a credit for the income taxes paid to Virginia.