By Many Measures, DC Has One of the Lowest Tax Burdens in the Country

• February 8, 2016

by Nena Perry-Brown

District Measured recently analyzed the Office of Revenue Analysis (ORA) report, Tax Rates and Tax Burdens 2014: A Nationwide Comparison, which takes a look at property, sales, auto, and income taxes in DC and other large cities.

Although surveys will often compare DC data to that of other states, the ORA’s study opted to look at data from each of the fifty states’ largest cities in combination with applicable state data to create a more comprehensive representation. The data is broken down for a hypothetical family of three in five income brackets — $25,000, $50,000, $75,000, $100,000, and $150,000. After removing the auto tax variable, UrbanTurf found that the overall combined tax burden as a percentage of income for each DC family in the report is 12.5 percent — one of the lowest tax burdens in the country.

District homeowners pay property taxes at a rate of $0.85 per $100 in assessed property value, while the nationwide median and average are $1.40 and $1.56 per $100, respectively. A homestead exemption of $70,200 coupled with the aforementioned rate put DC’s property tax burden below the 51-city average for all but the lowest income level analyzed. (The family making $25,000 annually is assumed to be renting.) Income taxes are a murkier subject, as the tax rates for $50-, $75-, $100- and $150,000 annual incomes are higher than in most of the country — and skew high particularly for those who make $50,000 or $150,000. Nine states either have no income tax or have enough exemptions to effectively nullify all individual income taxes.

DC has the largest city-levied sales tax amongst all the cities surveyed. However, because there are no state, county, school district or transit district sales tax rates, the overall sales tax burden in DC is one of the smallest in the nation.

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This article originally published at https://dc.urbanturf.com/articles/blog/d.c._has_one_of_the_lowest_tax_burdens_nationwide/10845