The estate tax in Washington, D.C., is a tax levied on the transfer of a deceased person’s assets to their heirs or beneficiaries. Unlike the federal estate tax, which applies nationwide, the D.C. estate tax is specific to residents of the District or non-residents with tangible property (like real estate) located in D.C. The tax is calculated based on the value of the taxable estate, which includes assets like real estate, bank accounts, investments, and personal property, minus allowable deductions.Key Features of the D.C. Estate Tax in 2025

1. Exemption Amount:
   As of 2025, Washington, D.C., has an estate tax exemption of $5,760,900 per individual (adjusted periodically for inflation). This means that estates valued below this threshold are not subject to the D.C. estate tax. For estates exceeding this amount, the tax applies only to the portion above the exemption.
2. Tax Rates:
   The D.C. estate tax uses a progressive rate structure, ranging from 11.2% to 16% depending on the taxable estate’s value. For example:
   • Estates valued between $5,760,900 and $6 million may face an 11.2% tax on the excess.
   • Larger estates, such as those over $12.92 million, are taxed at the highest rate of 16% on the portion above that threshold.
3. Portability:
   Unlike the federal estate tax, D.C. does not offer portability of the exemption between spouses. This means that a surviving spouse cannot use their deceased spouse’s unused exemption to increase their own.
4. Filing Requirements:
   If the gross estate (before deductions) exceeds the exemption amount, an estate tax return must be filed with the D.C. Office of Tax and Revenue, even if no tax is due. The return is typically due nine months after the date of death, though a six-month extension may be requested.

How Does the D.C. Estate Tax Differ from the Federal Estate Tax?

While both taxes apply to estates, there are key differences:

• Exemption Levels: The federal estate tax exemption for 2025 is significantly higher, at $13,610,000 per individual (adjusted for inflation), compared to D.C.’s $5,760,900.
• Portability: The federal estate tax allows portability of unused exemptions between spouses, while D.C. does not.
• Tax Rates: Federal estate tax rates range from 18% to 40%, which is higher than D.C.’s 11.2% to 16%.

If an estate is subject to both federal and D.C. estate taxes, careful planning is essential to minimize the overall tax burden.

Planning Tips to Minimize D.C. Estate Tax

1. Leverage the Exemption: Gifting assets during your lifetime can reduce your taxable estate. In 2025, you can gift up to $18,000 per person annually (the federal gift tax exclusion, which D.C. follows) without incurring gift taxes or reducing your estate tax exemption.
2. Establish Trusts: Certain trusts, like irrevocable life insurance trusts (ILITs) or charitable trusts, can remove assets from your taxable estate, potentially lowering your D.C. estate tax liability.
3. Consider Charitable Giving: Donations to qualified charities are deductible from your taxable estate, reducing the amount subject to tax.
4. Work with Professionals: Estate planning is complex, especially with D.C.’s unique rules. Consult a tax professional or estate planning attorney to create a strategy tailored to your financial situation.

Non-Residents and D.C. Property

If you’re not a D.C. resident but own real property or tangible personal property in the District, your estate may still be subject to D.C. estate tax on those assets. For example, owning a condo in D.C. could trigger tax liability, even if you reside elsewhere. Non-residents should consult with an estate planner to understand their obligations.

Why It Matters

The D.C. estate tax can significantly affect how much of your wealth is passed on to your heirs. Without proper planning, a large portion of your estate could be eroded by taxes, leaving less for your family or chosen beneficiaries. Understanding the rules and exemptions empowers you to make informed decisions and preserve your legacy.

Conclusion

Navigating the Washington, D.C. estate tax can feel daunting, but with the right knowledge and planning, you can minimize its impact. By leveraging exemptions, exploring trusts, and working with professionals, you can ensure your assets are distributed according to your wishes.

Stay proactive and keep up with annual adjustments to exemptions and rates to optimize your estate plan.For more details or to file an estate tax return, visit the D.C. Office of Tax and Revenue. If you have specific questions about your estate, consider reaching out to a qualified estate planning attorney to guide you through the process.