DC taxes gains as income, up to 10.75%
The District has no separate capital gains rate. A resident’s gain is taxed through seven brackets from 4% to 10.75%, with the top rate above $1 million. A $100,000 gain that lifts DC taxable income from $100,000 to $200,000 adds $8,500, all of it in the 8.5% band.
DC residency follows domicile and a 183-day statutory resident test, and the District does not tax a nonresident individual’s wages, so commuters from Maryland and Virginia report their income to their home states instead. DC also applies its own recordation and transfer taxes at a property closing, which are separate from income tax.
Apply the District resident schedule to complete annual income
The District taxes a resident’s taxable income through seven marginal bands. Its current Office of Tax and Revenue schedule and Code section 47–1806.03 agree on thresholds of $10,000, $40,000, $60,000, $250,000, $500,000 and $1 million. The top 10.75% rate applies only to income above the final threshold. Multiplying an entire sale by that top rate would overstate many resident scenarios.
This worksheet starts with separately approved DC taxable income without and with the transaction. Those annual amounts include state basis reconciliation, allowable capital-loss netting, adjustments and the approved District deduction. They are not gross proceeds, federal ordinary income, federal taxable income or the NIIT MAGI fields. A long federal holding period does not create a separate preferential DC rate in this resident schedule.
Residency must be determined independently. The statutory definition includes domicile and specified statutory-resident circumstances; a mailing address alone cannot approve it. The mode covers one resident taxable unit: one individual return or one joint aggregate schedule. Combined separate returns needing two schedules, part-year residents, nonresidents, franchise returns, trusts and estates require their own rules. Selecting the full-year resident confirmation approves the scope for both annual comparisons rather than changing the legal facts.
For a hand example, $100,000 of approved taxable income produces $3,500 plus 8.5% of $40,000, or $6,900 before credits. At $200,000 the corresponding amount is $15,400. With no usable nonrefundable credits in either scenario, the modeled DC difference is $8,500. The federal calculation remains separate and still depends on the federal gain and annual NIIT inputs.
Enter the full approved usable nonrefundable-credit balance for each scenario. The model caps a balance at that scenario’s computed tax; it does not generate a refund from unused credits. A credit that changes eligibility after a gain must be re-prepared. Withholding, estimated payments and refundable credits are not these inputs. Blank credit amounts preserve the before-credit schedule outputs but leave final DC and combined tax unresolved.
The statutory rate calculation is an estimate, not a completed D-40. The 2025 D-40 booklet illustrates taxable-income preparation and the filing tax table but remains a 2025 document; it is not a fabricated 2026 return packet. Prescribed filing-table intervals, return rounding, tax-table elections, special taxes and other return effects can differ from this cents-based schedule comparison. Use prepared final liabilities when those effects matter.
The actual 2026 D-40ES booklet repeats these seven rate bands in its payment worksheet. It does not authorize copying federal taxable income into the District controls. Its deduction worksheet and the revised 2025 filing packet must be read with the current District conformity law, which can require federal exclusions to be added back. We use the verified rate structure here and require an independently approved District taxable base rather than silently adopting every deduction number in a payment booklet.
Keep a worksheet identifying the DC treatment of the particular asset, federal and District basis, residency, approved deductions and current credit eligibility. The source section links the resident definition and deductions law as well as the rate table. Reconcile those facts before sharing a scenario; the share URL contains the entered figures and is not a filing submission.
District of Columbia preparation checklist
- Full-year DC individual residency and seller identity
- Two complete approved District taxable-income scenarios
- Actual usable nonrefundable credits, excluding payments and refunds
- Current filing instructions and tax-table/rounding differences
District Code: resident tax schedule · Actual 2026 D-40ES rate table, page 9 · Resident definition · District deduction rules. These continuing provisions are distinct from a final 2026 filing packet.