Washington, D.C. Retirement Taxes (2026): The $3,000 Deduction Died in 2015 — Here’s What Actually Applies

2026 edition · statute-cited · part of Clear Money Guide’s 51-state retirement tax series. This guide covers state taxes on retirement income and estate transfers; property and sales taxes vary by county and are outside its scope.

Updated July 24, 2026. Quick answer: The District taxes retirement harder than any state on its borders: pensions, 401(k) and IRA withdrawals are fully taxable with no general retirement exclusion (the exception is survivor benefits from the District or federal government paid to people 62 or older) — the old $3,000 exclusion for DC/federal government pensions was repealed back in 2015, and even military retirement is fully taxable, which almost no state does. Rates run from 4% to 10.75%. Social Security is the one full exemption. At death, DC levies an estate tax with a 2026 zero-bracket of $4,988,400 (CPI-indexed) and rates of 11.2% to 16%.

Before the tax question, the police officers and firefighters retirement plan, with its refund and survivor rules from its own plan description: DC police and firefighters retirement decisions.

Drawing a pension? Whether the state withholds tax from it, from its own documents: Washington, DC tax withholding on pension payments.

Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Washington, DC tax withholding on IRA and 401(k) withdrawals.

Looking ahead to 2027? The state’s estate tax exemption for deaths in 2027, from its own tax documents: Washington, D.C. estate tax exemption 2027.

Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Washington, D.C. have an inheritance tax?.

Making a gift or planning an estate? The state’s gift tax answer, from its own tax documents: Does District of Columbia have a gift tax?.

Saving for a child’s college? The state’s 529 break has its own page: Washington DC 529 plan tax deduction.

For 401(k) and IRA withdrawals specifically: does Washington, D.C. tax 401(k) and IRA withdrawals.

What the District doesn’t exempt (the list is short because the exemptions are)

DC’s distinction is the absence of carve-outs: no age-based exclusion for pensions or retirement accounts, no pension modification, no government-pension break since D.C. Law 20-155 repealed the $3,000 exclusion for tax years after 2014 (D.C. Code §47-1803.02(a)(2)(N)(i) limits it to years before 2015; a restoration bill, B24-0071, went nowhere) — and, uniquely for the region, no military retirement exemption at all. A federal retiree living in the District pays full DC rates on a pension that Virginia would partially shelter and Pennsylvania would ignore entirely. Social Security’s full exemption is the main retiree concession in the code; the code also excludes survivor benefits from the District or federal government paid to people 62 or older.

How the District taxes retirement income (statute-cited)

Income tax	Graduated, 7 brackets, 4% to 10.75%
Social Security	Not taxed (excluded)
Pension / 401(k) / IRA	Fully taxable — no general retirement exclusion (the $3,000 government-pension exclusion was repealed for tax years after 2014, D.C. Law 20-155; survivor benefits from the District or federal government paid at 62 or older remain excluded under D.C. Code §47-1803.02(a)(2)(N)(ii))
Military retirement	Fully taxable — no exclusion
Estate tax	Yes — 2026 zero-bracket $4,988,400 (up from $4,873,200 in 2025, CPI-indexed); rates 11.2% to 16%
Inheritance tax	None

Probate: reasonable fees and a freshly doubled small-estate lane

Personal-representative and attorney compensation is reasonable (D.C. Code §20-751 et seq.) — no percentage schedule. The fresh change: small-estate administration now covers estates up to $80,000 (D.C. Code §20-351, as amended by D.C. Law 25-302, the Strengthening Probate Administration Amendment Act of 2024). Full table: estate tax by state. Context: probate cost by state · small-estate limits by state.

Is Washington, D.C. a good place to retire for taxes?

For retirement income, no — it is the region’s most expensive jurisdiction: every withdrawal dollar taxed at up to 10.75%, no senior shelter, and the rare full taxation of military pensions. Social Security’s exemption and the CPI-indexed estate threshold are the softeners. The cross-border arithmetic is stark enough to be the whole story: the same federal pension is partially sheltered in Virginia, fully exempt in Pennsylvania, and untaxed at withdrawal in no-tax states — which is why DC-area retirees so often keep the job’s city and change the home’s state.

D.C. vs. common alternatives

State	Social Security	Pension / 401(k) / IRA	Estate tax	Inheritance tax
Washington, D.C.	Not taxed	Fully taxable (to 10.75%) , with no general retirement exclusion	Yes — $4.99M zero-bracket (2026)	None
Maryland	Not taxed	Pension exclusion up to $40,600 for 2026 at 65+ (not IRAs)	Yes — $5M exemption	Yes — 10% collateral heirs
Virginia	Not taxed	Taxable; age deduction up to $12,000 (income-tested)	None	None
Florida	Not taxed	Not taxed (no income tax)	None	None

Comparison rows summarize general rules; see our 51-state retirement tax table for statute-cited detail.

Considering a Roth conversion? The converted amount is taxed as ordinary income in the year you convert, and the District of Columbia may treat it differently from the retirement income above — see how all 51 jurisdictions tax Roth conversions.

Finding a financial advisor in the District of Columbia

Per the SEC’s July 2026 Investment Adviser roster, the District of Columbia has 59 SEC-registered advisory firms (#37 nationally) managing $549.0 billion (#25 by AUM). Full breakdown: the District of Columbia advisor statistics. Reviewing fee structures: fee-drag calculator.

Cite or share this guide

Suggested citation: Clear Money Guide, “Washington, D.C. Retirement Taxes (2026 edition),” statute-cited; clearmoneyguide.com/washington-dc-retirement-taxes/. Free to cite with attribution and a link. Data verified July 23–24, 2026 against state statutes, session laws, and revenue-department guidance.

Primary sources

• https://code.dccouncil.gov/us/dc/council/code/sections/47-1803.02
• https://cfo.dc.gov/sites/default/files/dc/sites/ocfo/release_content/attachments/OTR%20Testimony%20on%20Pension%20Exclusion%20and%20Restoration%20Act%20of%202021.pdf
• https://taxfoundation.org/data/all/state/state-income-tax-rates-2026/
• https://otr.cfo.dc.gov/release/notice-oct-1-2025-tax-changes
• https://code.dccouncil.gov/us/dc/council/code/sections/20-351
• https://code.dccouncil.gov/us/dc/council/laws/25-302