DC collects revenue from taxes and other sources to fund the programs, services, and infrastructure that make the District a place where people want to live and everyone can thrive. Property tax is one of DC’s largest sources of local revenue. By building a tax system based on people’s ability to pay—with the wealthiest paying the greatest share of their income in taxes relative to households with middle and low incomes—the District can address historic racialized wealth inequities and build an equitable economy of shared abundance.

This resource provides an overview of DC’s residential property tax, including how property tax is calculated and the tax benefit programs that reduce a homeowner’s tax bill.

The Property Tax Is One of DC’s Largest Revenue Sources

Tax revenue is vital to ensuring communities have well-funded schools, safely built environments, and unpolluted areas where people can live comfortably. The three largest sources of DC’s local tax revenue are individual income tax, sales and use tax, and property tax (Figure 1).

Figure 1.

DC has two kinds of property tax:

• The real property tax is an annual tax on the value of land and buildings in the District. DC raises most of its property tax revenue from this tax: $2.8 billion in fiscal year (FY) 2026, which accounts for about 23.6 percent of the District’s local revenue.^[1] This publication focuses on residential property taxes, which fall under the category of real property tax.
• The personal property tax is a tax on business equipment and is a much smaller source of tax revenue, raising just under $80.4 million in FY 2026.

Most of DC’s local property tax revenues go into the general fund, which DC can use to pay for any of the expenditures in the operating or capital budgets. Some property tax revenue is earmarked, however, for special purposes. For example, 15 percent of the revenue from deed recordation and transfer taxes is dedicated to the Housing Production Trust Fund, which finances affordable housing development in the District.

DC Taxes Different Types of Property at Different Rates

Properties in the District are classified into different classes based on whether they are residential, commercial, vacant, or blighted, and each class of property is taxed at a different rate, as shown in Table 1. Like many states that separate property into different classes, DC uses this system to reduce taxes on residential property and tax other property types at higher rates. (Maryland and Virginia require localities to tax all types of real property at the same rate).

TABLE 1.

Residential properties have the lowest tax rate of all property classes in DC. Residential properties are divided into two subcategories, class 1A and 1B. Class 1A consists of residential multifamily dwellings with three or more units (e.g., apartment buildings) and has a rate of 85 cents per $100 of taxable assessed value. Class 1B consists of residential properties with two or less units, such as single-family homes, row houses, townhouses, or homes with one additional living unit, and are taxed at a rate of 85 cents for the first $2.5 million in assessed value of a property and $1.00 on assessed value above $2.5 million. By contrast, DC taxes even the lowest value commercial properties (those valued under $5 million or less) at $1.65 per $100 of taxable assessed value—about twice the residential property tax rate.

As a result, residential property constituted 65 percent of the District’s real property value, while revenue from residential property taxes made up only 43 percent of real property taxes owed in 2025, the most recent year available. By comparison, commercial property made up only 34 percent of real property value in 2025, but 53 percent of real property taxes owed (Figure 2).

Figure 2.

DC Council sets property tax rates, but DC law caps annual growth in residential property tax revenue at 7 percent. If total residential property tax revenue is expected to exceed that threshold, then DC reduces the tax rate to bring total collections down. When compared to the uniform property tax rate in neighboring Virginia and Maryland counties, DC has the lowest residential property tax rate in the entire Washington Metropolitan Area, but the highest commercial rate.

DC imposes this relatively low residential property tax rate for two primary reasons. First, DC has high home values, which means that the District can generate significant revenue with property tax rates that are lower than many other cities. Second, DC relies less on property taxes than many other localities because it collects significant revenue from other sources, such as income and sales taxes.^[2]

The Cost of Tax-Exempt Properties

DC is home to a uniquely large number of tax-exempt commercial properties, due in large part to the presence of the federal government. These tax-exempt properties significantly reduce the District’s real property tax base. In tax year 2025, only 58 percent of total real property in DC was taxable. The tax exemption for federal property cost the District more than $1.2 billion in foregone revenue in 2025 and was the District’s largest real property tax expenditure. Additional exemptions for DC government property, educational institutions, embassies, and religious institutions cost DC hundreds of millions in foregone revenue and made up the District’s next four largest real property tax expenditures in 2025 (Table 2).

Table 2

How DC Taxes Residential Property

To determine a homeowner’s tax bill, the District must first determine the property’s value. The Real Property Tax Administration of the Office of Tax and Revenue assesses each property based on a range of characteristics, including size, age, condition of the building, and quality of construction, among other things. DC law requires that all real property be assessed:

• Uniformly, meaning that properties with similar characteristics should be valued similarly; and
• According to its estimated fair market value, meaning that assessments should strive to reflect what a property would actually sell for on the market.

Because there are more than 200,000 assessed properties in the District, DC uses mass appraisal methods instead of conducting annual individual assessments on each parcel. DC’s property assessment division groups properties by similar characteristics and market factors. A property’s value is assigned based on those characteristics. Mass appraisal techniques don’t always capture the full market value of a property, so each year DC evaluates the quality of its appraisals by comparing property appraisals to their sales prices.

DC Has Several Property Tax Benefits for Owner-Occupied Properties

While property assessment forms the basis of the full market value of a property and the owner’s tax liability, residential property owners who live in their homes (known as owner-occupied homes) do not always pay taxes on the full assessed value of their homes. Instead, they pay based on the taxable assessed value of a home, which may, in part, be reduced by several tax benefit programs listed below:

1. The homestead deduction: This deduction permits homeowners who live in their home to subtract a certain amount from the full assessed value of their home and pay tax only on that reduced taxable assessment. The amount of the exemption changes annually; in tax year 2026, the homestead deduction is $91,950. For example, Figure 3 shows that if a homeowner’s home is worth $400,000, they paid property tax on only $308,050 in 2026.
2. The credit for senior citizens and persons with disabilities: Homeowners who are either over age 65 or have a disability, meet eligibility criteria for the homestead deduction, and whose income falls below a certain level (which changes each year based on cost-of-living) qualify for a 50 percent reduction in their real property tax liability.
3. The 10 percent assessment increase cap: Property owners who meet homestead eligibility criteria also benefit from an annual 10 percent cap on growth in the taxable value of their property.^[3] Seniors and disabled residents who qualify for the credit for senior citizen or disabled property owner tax exemption also receive an even more generous growth cap of two percent. However, taxable value of the property must be at least 40 percent of the property’s full assessed value in the current year.
4. The property tax circuit breaker: Known locally as “Schedule H,” this program provides an income-based property tax credit to residents with low and moderate incomes whose property tax bills are high relative to their income. Schedule H is available both to resident homeowners and renters, who are assumed to pay a portion of DC property taxes in the form of higher rent. For tax year 2025, the tax liability of renters and homeowners could be reduced up to $1,425. In order to be eligible, an individual needs to have an adjusted gross income of $66,000 or less if they are under age 70 or $90,000 or less for individuals age 70 or older.

Figure 3.

Due in part to these significant tax reduction programs, owner-occupied properties enjoyed an effective tax rate of $0.68 per $100 of assessed value in tax year 2024.^[4] All of these programs benefit owners who live in their homes no matter the value of the property and, in the case of the homestead exemption, regardless of the property owners’ income. In FY 2025, the homestead deduction cost DC $73.5 million in forgone revenue (Table 3).

TABLE 3.

DC Taxes Real Estate Sales at Different Rates Based on Sale Price

In addition to taxing real property annually, DC also taxes real property when it is transferred from one party to another. These taxes, called deed recordation and transfer taxes, are levied separately from standard property taxes. When one party receives a real estate transfer from another party (such as when a buyer purchases a property from a seller), the recipient is responsible for letting the District know and paying the deed recordation tax. For that same transaction, the transferor (such as a seller who transfers the property to a buyer) is responsible for paying the deed transfer tax. Both taxes are calculated as a percentage of either the sale price or, if that amount is nominal (as in the case of a gift, for example), the fair market value of the property.^[5] In FY 2024, DC raised more than $316 million from deed recordation and transfer taxes combined, equaling 2.7 percent of total gross tax revenue.

All properties are subject to deed recordation and transfer taxes. However, not all properties are subject to the same deed recordation tax rates. For residential property transfers where the fair market value of the home is less than $400,000, buyers and sellers each pay 1.1 percent of the fair market value of the property for deed recordation and transfer taxes (Table 4). For residential properties over $400,000, each pays 1.45 percent of the fair market value of the property. First-time homebuyers in DC receive a discounted deed recordation rate of 0.725 percent.

TABLE 4.