For the 2nd week our blog is a featured advertiser over at our favorite local site, DCist! So we wanted to offer another post with local relevance for our DC audience.
When deciding where to live in the DC metro area there are a lot of factors at play. How close do I want to be to the office? Do I want a larger apartment in a less convenient location? How important is easy access to a yard and parks? How close do I want to be to nightlife?
But another important factor many people don’t consider is how their address will affect their tax rates.
For a Capitol Hill staffer who has $70,000 in taxable income, and is paying taxes on a $250,000 property, the yearly tax difference could be substantial. Living in D.C., they would owe $6,875 per year to the city government. If the same person lived in Arlington, VA their state and local tax bill would come to $5,812.50. If they lived in Montgomery County, MD they’d owe a mere $3,662.50. Quite the spread…
Here’s a full breakdown:
Washington D.C.
Income Tax
– 4 percent on the first $10,000 of taxable income
– 6 percent on taxable income between $10,001 and $40,000
– 8.5 percent on taxable income of $40,001 and above.
Residential Property Tax
0.85 percent
Virginia
Income Tax
– 2 percent on the first $3,000 of taxable income
– 3 percent on taxable income between $3,001 and $5,000
– 5 percent on taxable income between $5,001 and $17,000
– 5.75 percent on taxable income of $17,001 and above.
Property Tax
VA determines property taxes at the local level. Here are some of the relevant NoVa county rates:
- Arlington- 0.818%
- Alexandria- 0.845%
- Fairfax- 0.92%
- Loudon- 1.14%
- And here are some of the City Rates:
- Falls Church City- 1.03%
- Fairfax City- 0.79%
Maryland-
Income Tax
– 2 percent on the first $1,000 of taxable income
– 3 percent on taxable income between $1,001 and $2,000
– 4 percent on taxable income between $2,001 and $3,000
– 4.75 percent on taxable income between $3,001 and $150,000
– 5 percent on taxable income between $150,001 and $300,000
– 5.25 percent on taxable income between $300,001 and $500,000
– 5.5 percent on taxable income between $500,001 and $1 million
– 6.25 percent on taxable income more than $1 million.
Property Taxes
Maryland also breaks down property taxes at the local level. Here are some areas of note:
- Frederick County- 0.936%
- Montgomery County- 0.661%
- Prince George’s County- Varies from a low of 0.77% to a high of 0.957% depending on the city. Click here for the full list
Tax information source: BankRate.com
9 Comments
you’re missing the county income tax in MD. Fredrick, Montgomery, PG, etc. all have an additional tax on your income – ~1.25% I think because my net taxes in Montgomery were 7.5%.
Virginia also charges personal property tax on your car – every year.
PS – for $250k in this area you can count on living in a shoe box
When I lived in metro DC I always wondered what the different tax rates were for income, meals, sales, alcohol, etc. Basically…where could I purchase things most cheaply. May I suggest an excel spreadsheet with all of the tax-related data?
The first commentor is correct, but the taxes are higher than he suggests. County income tax rates are at http://individuals.marylandtaxes.com/incometax/localtax.asp
Montgomery = 3.2%
PG = 3.1%
Frederick = 2.96%
These are significant enough to warrant more than a footnote. They change the rankings by making MD more expensive than DC.
When I lived in MoCo (not too long ago), you only paid local tax if you lived in an incorporated area (e.g., Bethesda, Rockville, etc.) For those of us in Silver Spring, we didn’t have a locality tax.
My income tax went down when I moved from PG to DC–you’re forgeting the piggy back county tax rates. Note also that maryland and DC don’t charge sales tax on groceries where VA does.
Homeowners should note that DC has a homestead credit that decreases your PAV by $67.5k before the rate is applied. So back to the 250k house example, in Arlington your rate is .818% but in DC your rate is actually .6205% for this example!
Point is, with taxes you have to look at the entire tax burnden to rank and compare.
I recently moved to IN from VA and I have to say that the difference in home prices were drastic, but the property taxes are pretty similar. I think it is that they are taxing us for a new sports stadium. Does anyone know if any of the DC or other taxes listed are inflated to cover sporting venues? As far as federal tax rate changes and income tax changes check out http://www.federaldirecttax.com. We have a newsletter highlighting monthly updates you can access for free.
I am seriously going to start using all of that! Thank you so much, I am not even kidding! There is nothing that I hate more than coming up with content all the time to barely keep our real estate blog up. It’s just so time consuming – so thanks again!
I currently live in Delaware Co PA (near Philly), but soon will be moving back to the DC area. I used to live in Montgomery Co in 2005 and PG Co until 2008, and I thought that taxes were bad there until I moved here to PA. My main issue is that PA gives you no break for military pay or tax deferred savings (eg: 401k, IRA’s, etc), plus they hit you hard with local city/town income taxes. MD has no break on military pay, but income is based on your 1040 gross adj income (a plus for tax deferred savings). I’m thinking about giving VA a shot this time, but I don’t know how it compares for my situation. Any suggestions?