Updated October 4, 2026. Quick answer: Yes. The District taxes a capital gain as ordinary income: its D-40 booklet has the filer take the gain from the federal return (“Enter the amount from your 1040, 1040-SR or 1040-NR.”), and the schedule runs from 4% to 10.75% over $1,000,000. For qualified small business stock, the booklet says “The gross income exclusion under IRC § 1202 does not apply.”
Selling your home? How the state taxes the profit, from its own tax documents: Does Washington, DC tax the profit from selling your home?.
The same question for trust income: does District of Columbia tax trust income.
The same question for dividends and interest: does District of Columbia tax dividends and interest.
The same question for annuity payments: does District of Columbia tax annuity income.
How District of Columbia treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Taxed as ordinary income on the graduated schedule; no separate rate or exclusion for gains printed |
| Rates, single filer (D.C. Code 47-1806.03(a)(11)) | 4% to $10,000; 6% to $40,000; 6.5% to $60,000; 8.5% to $250,000; 9.25% to $500,000; 9.75% to $1,000,000; 10.75% above $1,000,000 |
| Qualified small business stock | The federal section 1202 exclusion does not apply for District purposes (2025 D-40 booklet) |
A $50,000 long-term gain
A $50,000 gain taxed wholly at the lowest rate, 4%, would add computed as $50,000 x 4% = $2,000; taxed wholly at the top rate, 10.75% (which applies only above $1,000,000 of taxable income), $5,375. Your bracket decides.
What changes in 2026
The documents read print no 2026 rate. The 2025 booklet lists changes tied to the federal 2025 tax act.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether the District taxes Social Security, what leaving the District means for retirement taxes, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- D.C. Code section 47-1806.03 (Tax on residents and nonresidents, imposition and rates): https://code.dccouncil.gov/us/dc/council/code/sections/47-1806.03
- 2025 D-40 Individual Income Tax Forms and Instructions booklet: https://otr.cfo.dc.gov/sites/default/files/dc/sites/otr/publication/attachments/2025_D40_Book_082026_v1.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.