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Updated June 2026Reviewed for Tax Year 2026

District of Columbia Capital Gains Tax 2026

District of Columbia taxes long-term capital gains at approximately 6.75% in 2026. This guide covers federal LTCG rates (0/15/20% plus 3.8% NIIT), how District of Columbia treats short- vs long-term gains, residency-change planning, home-sale exclusion, and Qualified Small Business Stock (QSBS) treatment.

District of Columbia at a glance · 2026

Income tax
6.75%
Property tax
0.56%
Capital gains
6.75%
Sales tax
6.00%

Partial exemption (age / income limits apply). Top 10.75% bracket; 8.25% franchise tax on businesses.

Federal long-term capital gains rates (2026)

Federal long-term capital gains (assets held more than one year) are taxed at 0%, 15%, or 20% depending on taxable income, plus a 3.8% Net Investment Income Tax (NIIT) on investment income above $200k single / $250k MFJ. Short-term gains (held one year or less) are taxed at ordinary federal rates of 10% to 37%.

For 2026, the 0% bracket applies up to approximately $48,350 single / $96,700 MFJ of total taxable income, the 15% bracket runs to roughly $533,400 single / $600,050 MFJ, and the 20% rate applies above those thresholds.

District of Columbia treatment of capital gains

District of Columbia does not provide a preferential rate for long-term capital gains. Both short-term and long-term gains are generally taxed as ordinary income at the state's marginal rate of approximately 6.75% for high earners. The combined federal + District of Columbia rate on long-term gains for top earners is approximately 30.55% (20% federal + 3.8% NIIT + 6.75% state).

Capital losses can offset capital gains plus up to $3,000 of ordinary income per year on the federal return, with unused losses carried forward indefinitely. Most states conform to federal rules for loss treatment, though some have their own carryforward limits.

Home sale exclusion (Section 121)

The Section 121 exclusion lets you exclude up to $250,000 (single) or $500,000 (MFJ) of gain on the sale of a primary residence, provided you owned and used the home as your main home for at least 2 of the last 5 years. District of Columbia generally conforms to the federal exclusion, meaning excluded gain is not taxed at the state level either.

Any gain above the exclusion amount is taxed at federal LTCG rates and District of Columbia's 6.75% state rate. Track basis carefully — capital improvements (kitchen remodels, additions, new roofs) raise basis and reduce taxable gain.

Capital gains planning for District of Columbia residents

Common strategies that work well for District of Columbia households:

  • Hold appreciated assets at least 12 months and one day to qualify for long-term rates.
  • Harvest losses in down years to offset realized gains.
  • Time large gain realizations for years of lower other income (sabbatical, retirement gap year).
  • Use Qualified Opportunity Zone funds to defer and reduce federal gain.
  • Donate appreciated stock to a Donor-Advised Fund instead of cash — avoids the gain entirely.
  • For very large gains, run a residency-change analysis — moving to a no-tax state before realization can save 6.75% of the gain.

Worked example · District of Columbia, 2026

Consider a District of Columbia investor with a $100,000 long-term capital gain in 2026 and taxable income in the 15% federal bracket. Federal LTCG tax: $15,000. NIIT (if MAGI above threshold): $3,800. District of Columbia state tax: $6,750.

Total tax on the $100,000 gain: approximately $25,550, leaving roughly $74,450 after tax.

Run the District of Columbia calculator →

District of Columbia Capital Gains Tax FAQ

Yes — District of Columbia generally taxes capital gains as ordinary income at the state's marginal rate (approximately 6.75% for high earners).

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Related District of Columbia Resources

District of Columbia Tax Brackets 2026 →District of Columbia Tax Guide →District of Columbia Income Tax Calculator →District of Columbia Property Tax Guide →Capital Gains Calculator →District of Columbia Retirement Tax Guide →District of Columbia Tax Deductions →All 50 State Tax Guides →Tax Rankings & Research →

Sources Used

Our data is sourced exclusively from official tax authorities and non-partisan policy institutes. Rates and thresholds are verified against the most recent official publication for tax year 2026.