Moving to the District of Columbia

An income tax can reach two kinds of people: the ones who live in the taxing jurisdiction and the ones who earn money there. The District of Columbia reaches only the first. Under the Home Rule Act the Council may not tax the income of people who live outside the District, so a Maryland or Virginia resident who works downtown owes DC nothing and files no DC return, and a District resident who works in Maryland or Virginia owes those states nothing on wages and pays DC on everything. That makes residency the entire question. You are a District resident for the year if you were domiciled in DC at any time during it, or if you kept a place of abode in DC for 183 days or more even while your permanent home was somewhere else. Move in or out during the year and you file a part-year D-40, reporting the whole year’s federal AGI and then subtracting on Line 8 the income you received while you were not a resident.

Because there is no DC return for nonresidents, there is no DC tax on a nonresident’s DC-source income of any kind: not wages, not a business run from a DC office, not rent from a DC rowhouse, not the gain on selling it. The Office of Tax and Revenue (OTR) says so in its own FAQs, where a Virginia resident who sold a DC condominium is told to report the gain to Virginia, not the District. The day you become a resident, all of your income becomes DC income, taxed at rates that reach 8.5% at $60,000 of taxable income. The day you stop, none of it is.

The two tests

Domicile. Your domicile is the one place you treat as your permanent home, the place you intend to return to when you are away. You have only one at a time, and it does not change until you abandon it and establish a new one. A person domiciled in the District at any time during the year is a resident for that part of the year, however few days they spent here; someone posted abroad for two years who keeps a DC domicile still files the D-40 on worldwide income.

The 183-day test. A person who is domiciled somewhere else but “maintains a place of abode within the District for an aggregate of 183 days or more” during the year is taxed as a resident anyway, a statutory resident. OTR’s guidance counts every day the abode is maintained, including days of temporary absence, toward the 183. So the test is not how many nights you slept in DC; it is how many days you kept the apartment. A consultant domiciled in another state who leases a DC apartment from March through December, and goes home most weekends, has maintained an abode for more than 183 days and is a District resident for the whole of that period.

The District carves out one group from the 183-day rule. Members of Congress and their staff, Executive Branch appointees and Supreme Court justices who are not domiciled in the District do not become residents by living here, and the 2025 D-40 booklet says they need not file. Everyone else who keeps a DC abode for 183 days does. The same booklet requires a return from a member of the armed forces whose legal residence for tax purposes is DC, wherever stationed; a service member domiciled elsewhere and stationed here is not a resident.

The District has no reciprocity agreements, because it needs none: it does not tax any nonresident’s wages to begin with.

The part-year return

A part-year resident files the ordinary D-40 and checks the part-year oval in the filing status section. Line 4 is still federal AGI for the whole year. The nonresident period comes out on Line 8, “income received during period of nonresidence,” and any federal adjustments that belong to that period are added back on Schedule I, Calculation A, Line 1, so the District does not give a deduction for an IRA contribution or student-loan interest that belonged to the months you lived elsewhere. What is left after the other subtractions is DC adjusted gross income for the resident period only.

Income is assigned to a period by when it was received, not when it was earned. A paycheck dated after the move is DC income even if it covers work done before; a bonus paid in February for last year’s work is DC income if you lived here in February. Your W-2 will not do this split for you, and it will do it wrong if payroll was never told about the move. Keep the pay stubs.

The standard deduction is prorated for the resident period, and so are certain credits; OTR’s filing FAQ names the child care credit, the earned income credit and the Keep Child Care Affordable credit (the former Early Learning Tax Credit). The child care credit for part-year residents is figured on Form D-2441. The DC College Savings Plan subtraction has its own part-year instructions on Schedule I. The precise proration method, whether by days or by months, is in Calculation D of the D-40 booklet, and the 2026 figures that go into it are not yet published, so the worked example below prorates by the half-year and marks the method.

Married couples have a rule of their own. To file jointly in DC, both spouses must have been District residents on December 31. If you and your spouse were part-year residents during different periods, you must file separately, on separate returns; the “separately on the same return” option is not available. A spouse who stayed behind to sell the house while the other started work in DC in January is the common case, and it means two returns that year.

Commuters: Maryland and Virginia residents who work in DC

If you live outside the District and work in it, you owe DC no income tax and file no DC return. Your home state taxes the wages. The only thing to get right is withholding. Give your employer Form D-4A, Certificate of Nonresidence in the District of Columbia, on which you certify that your permanent residence is outside DC and that you will not reside in DC for 183 days or more in the year; the employer then withholds nothing for the District. Give the employer your home state’s certificate at the same time.

If DC tax was withheld anyway, you recover it with Form D-40B, Nonresident Request for Refund. Attach every W-2 or 1099 showing DC withholding to the front of it, plus a copy of the return you filed with your home state; if that state has no income tax, a state-issued ID and proof of residency take its place. OTR warns that a D-40B without the attachments will not be processed. Each spouse files a separate D-40B; there is no joint request. Beginning with tax year 2025 it can be filed electronically through MyTax.DC.gov, which is faster than the paper route to P.O. Box 96147.

A nonresident military spouse who works in DC uses the same two forms and attaches the service member’s DD Form 2058 and a military ID to the D-40B.

District residents who work in Maryland or Virginia

The arrangement runs the other way too. A District resident who commutes to an office in Bethesda or Arlington files only the D-40 and pays only DC on the wages; you file the exemption certificate each of those states provides with your employer so that no Maryland or Virginia tax is withheld. OTR’s FAQ adds the warning that matters: an employer outside the District “may not withhold DC tax.” Many will if asked, on Form D-4. If yours will not, the whole year’s DC tax falls on estimated payments on Form D-40ES, with interest at 10% a year, compounded daily, on any installment that falls short. Settle this in the first month, not at filing time.

Remote work across the line

The District has no “convenience of the employer” rule and no nonresident return, so remote work is simple from the DC side. A Maryland or Virginia resident who works from home for a DC employer owes DC nothing; the employer should have a Form D-4A on file. A District resident who works from a DC apartment for an employer in another state owes DC on all of it; whether the other state also taxes the wages depends on that state’s rules. When it does, the District allows a credit, described next.

The credit for tax paid to another state

Schedule U, Part 1a, Line 1 is “state individual income tax credit,” with room for four states and a sheet for more, and the 2025 D-40 booklet asks for a copy of the other state’s return to be attached. The credit is for income tax paid to another state on income the District also taxes, and it is limited to the DC tax on that same income, so it can wipe out the double tax but never produce a refund of DC tax on other income. The exact scope, which income and which states qualify, is in the Schedule U instructions and should be checked for your situation.

The credit rarely arises for a commuter, since Maryland and Virginia do not tax a DC resident’s wages. It arises for the District resident with a rental property in another state, a share of a partnership or S corporation that files in several states, or wages taxed by a state that applies its own convenience-of-the-employer rule to remote workers.

Retirement income and the move

A pension earned elsewhere becomes DC income the day its recipient becomes a District resident, and the District taxes pensions, IRA withdrawals and Roth conversions in full; only Social Security is subtracted. A retiree leaving the District stops paying DC on all of it the day residency ends. Each payment belongs to the period in which it was received, so the timing of a large withdrawal or a Roth conversion around a move is worth planning. See The District of Columbia for retirees.

The year you move: what to do

• Fix the date. Residency begins or ends on a day, and the Line 8 split turns on it. Lease, closing statement, moving invoice and the day you started sleeping at the new address should agree.
• Change the withholding certificate the same week. Moving in: Form D-4 to the employer, and stop the old state’s withholding. Moving out: Form D-4A to a DC employer, and start the new state’s. OTR’s D-4A instructions tell an employee who becomes a DC resident to file a D-4 “promptly.”
• Move the domicile evidence. Driver’s license, voter registration, vehicle registration, the address on your federal return. The former state is the one likely to argue you never left, and these are what it looks at.
• Count the days if you keep two homes. Anyone who keeps a DC abode while domiciled elsewhere is one day away from statutory residency at 183. Keep a calendar.
• Estimated payments. If a non-DC employer will not withhold DC tax, the D-40ES installments are due April 15, June 15, September 15 and January 15, and the safe harbor is 90% of this year’s tax or 110% of last year’s DC tax. OTR lists “no DC tax liability in the prior year” as a safe harbor of its own, which spares a first-year resident the underpayment interest (verify), but not the bill: the whole year’s tax is still due April 15, and the second year has no such cushion.
• Two part-year returns. The District’s D-40 for the resident period and the other state’s part-year return for the rest, each starting from the same federal AGI. Attach the other state’s return to the D-40 if you claim the Schedule U credit.