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

Clear Money Guide

What this state guide covers

A quick view of the questions, practical details and source notes below.

What the District doesn’t exempt (the list is short because the exemptions are)
How the District taxes retirement income (statute-cited)
Probate: reasonable fees and a freshly doubled small-estate lane
Is Washington, D.C. a good place to retire for taxes?

Comparison tables scroll horizontally on smaller screens.

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taxable with no retirement exclusion of any kind — the old $3,000 exclusion for DC/federal government pensions was repealed back in 2015, and even military retirement is fully taxable, which almost no state does.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%.

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of carve-outs: no age-based exclusion, no pension modification, no government-pension break since D.C. Law 20-155 repealed the $3,000 exclusion for tax years after 2014 (D.C. Code §47-1803.02(a)(2)(N)(i) limits it to years before 2015; a restoration bill, B24-0071, went nowhere) —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 code’s single retiree concession.

How the District taxes retirement income (statute-cited)

Income taxGraduated, 6 brackets, 4% to 10.75%
Social SecurityNot taxed (excluded)
Pension / 401(k) / IRAFully taxable — no retirement exclusion (the $3,000 government-pension exclusion was repealed for tax years after 2014, D.C. Law 20-155)
Military retirementFully taxable — no exclusion
Estate taxYes — 2026 zero-bracket $4,988,400 (up from $4,873,200 in 2025, CPI-indexed); rates 11.2% to 16%
Inheritance taxNone

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.

Does District of Columbia tax Social Security? All 51 jurisdictions, 202643 do not tax Social Security at any income level. 8 tax it only above an income or age limit. District of Columbia is in the first group.Does District of Columbia tax SocialSecurity? All 51 jurisdictions, 202643 do not tax Social Security at any incomelevel. 8 tax it only above an income or agelimit.District of Columbia is in the first group.Not taxed at any income (43)Taxed only above a limit (8)ALAKAZARCACOCTDEDCFLGAHIIDILINIAKSKYLAMEMDMAMIMNMSMOMTNENVNHNJNMNYNCNDOHOKORPARISCSDTNTXUTVTVAWAWVWIWYPostal abbreviations, alphabetical. TheDistrict of Columbia is counted as ajurisdiction, which is why the total is 51 andnot 50.Counted from Clear Money Guide’s 2026 51-jurisdictionretirement-tax table, where every row carries its statutecitation. Table read 2026-08-17.
District of Columbia is one of 43 jurisdictions that do not tax Social Security at any income level in 2026. The other 8 exempt benefits only up to an income or age limit. Full rules and statutes: the 51-state table.

D.C. vs. common alternatives

StateSocial SecurityPension / 401(k) / IRAEstate taxInheritance tax
Washington, D.C.Not taxedFully taxable (to 10.75%) — no retirement exclusionYes — $4.99M zero-bracket (2026)None
MarylandNot taxedPension exclusion up to $41,200 at 65+ (not IRAs)Yes — $5M exemptionYes — 10% collateral heirs
VirginiaNot taxedTaxable; age deduction up to $12,000 (income-tested)None (repealed 2007)None
FloridaNot taxedNot taxed (no income tax)NoneNone

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

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