A Rundown of the District of Columbia Estate Tax
Navigate the District of Columbia estate tax landscape by understanding why it’s there, who has to pay it and its thresholds.
If you live in the nation’s capital (or own property there), the District of Columbia estate tax can be part of your planning picture. Here’s a plain-English overview of how we got here, why DC still has an estate tax, and what the current rules mean for you and your family.
How We Got Here
Before the early 2000s, most states—including DC—relied on a federal credit that let states “pick up” a portion of the federal estate tax without increasing a family’s total bill. Congress phased out that credit in 2005, forcing states to choose: eliminate their estate taxes or “decouple” and keep a stand-alone system. Many dropped theirs; some (including DC) kept one to preserve revenue and policy goals.
DC has also adjusted its tax over time. The exclusion (the amount you can pass free of DC estate tax) was $2 million in 2017. It rose with policy changes and inflation and then dropped to a flat $4 million in 2021. It has since been indexed annually. For 2025, the exclusion is $4,873,200.
Worth noting: DC does not have an inheritance tax for modern estates. (Only very old estates—deaths before April 1, 1987—deal with that.)
The District of Columbia estate tax targets larger estates with a 2025 exclusion of $4,873,200 and progressive rates up to 16%. Many states moved away from estate taxes after federal changes, but DC chose to keep one—for three practical reasons:
Revenue stability. When the federal credit disappeared, jurisdictions that relied on it faced a revenue choice. Keeping a stand-alone estate tax preserved a modest but meaningful revenue stream.
Progressivity. Estate taxes apply only to larger estates, aligning with DC’s broader progressive tax posture. (An Urban-Brookings analysis highlights how the federal credit’s end pushed states to make explicit policy choices.)
Coordination with federal rules, on DC’s terms. DC indexes its exclusion for inflation but at a level far below the federal exemption, so local policy—not just federal changes—drives who pays.
What the District of Columbia Estate Tax Means for Residents in 2025
Who files? A DC estate tax return is required if the gross estate meets the year’s filing threshold—even if no federal Form 706 is due. For 2025, that threshold is $4,873,200. Returns are due within 10 months of death (extensions available).
What’s taxed? The DC estate tax uses a progressive rate table that starts once you exceed the exclusion. For deaths in 2025, rates range from 11.2% up to 16% on amounts above the exclusion (with bracketed calculations).
How does DC handle property? If a decedent wasn’t a DC resident but owned DC real estate or tangible property, the return generally apportions tax based on the share of property located in DC. (You calculate a DC percentage and apply it to the tentative tax.)
Planning with spouses. Federally, portability allows a surviving spouse to use a deceased spouse’s unused federal exemption—helpful for larger estates—but portability doesn’t automatically solve state estate taxes. Couples with DC ties often use trusts and titling to align with both federal and DC rules. (Discuss portability with your planner; it’s powerful, but you must elect it properly.)
No DC inheritance tax today. Heirs don’t pay a separate DC inheritance tax on modern estates, though property in another state might trigger that state’s inheritance tax.
Practical Takeaways
Estimate early. If your combined assets (home equity, retirement accounts, brokerage, life insurance included in the taxable estate, business interests, etc.) could exceed the DC exclusion, run the numbers now. The official 2025 D-76 instructions show the filing thresholds by year and the exact bracket table for computing tax.
Coordinate with federal law. Federal exemptions and elections (like portability) matter, but your DC exposure is driven by DC’s lower exclusion and its own brackets.
Mind real estate location. Even nonresidents can face DC estate tax on DC-sited property; residents with property in other states should check those states’ rules.
(Further Reading: Learn about revocable trusts in DC versus Nevada.)