If you're a resident of the District of Columbia and leave behind more than $4.2 million (for deaths occurring in 2022), your estate may have to pay D.C. estate tax. The D.C. tax is different from the federal estate tax, which is imposed on estates worth more than $12.92 million (for deaths in 2023). So even if your estate isn't large enough to owe federal estate tax, it might still owe D.C. estate tax.
But it's not just D.C. residents who might owe D.C. estate tax. If you're a nonresident but own valuable real estate or other tangible assets (a boat or plane, for example) located in D.C., your estate might also need to file a D.C. estate tax return.
If the gross estate of a D.C. resident has a value of more than $4 million, the personal representative or executor of the estate must file a state estate tax return. (Smaller estates won't need to file the return.) Your gross estate will include just about all of the property you own at your death:
If you own assets with someone else, generally only your share will be included in your estate. In other words, if you and your spouse own your house, half of its value would be included in your estate.
Notably, your gross estate also includes non-probate assets. For example, the property you hold in a revocable living trust avoids probate, but it does not avoid estate taxes, and is counted in your gross estate.
Even if a D.C. estate tax return must be filed, it doesn't necessarily mean that the estate will owe estate tax. Property left to a surviving spouse, no matter what the amount, can be deducted from the gross estate tax. Your estate might also be able to take charitable deductions for gifts to public, charitable, and religious organizations. Your executor will also be able to deduct some administration expenses (attorney's fees, for example) from the gross estate. These deductions might lower the value of your estate below $4 million, in which case the estate will not owe estate tax.
If your estate owes estate tax, how much will it actually owe? In D.C., the tax rate currently ranges from 11.2% to 16%. Taxes are applied only to the portion of the estate over $4 million, and the rate increases with the size of the estate. For the exact D.C. estate tax rates, see the D-76 computation worksheets.
If an estate tax return must be filed, your executor will have to file it and pay any tax due within ten months after the date of death. After that date, interest begins accruing on any unpaid amounts. The executor can request a six-month extension to file the return, but that extension applies only to the return—not to the payment.
For District of Columbia estate tax return forms and instructions, visit the Office of Tax and Revenue. Preparing the tax return, however, will likely require the help of an expert. Your executor can hire an experienced lawyer or CPA and pay the fee from your estate's assets.
For more on estate planning issues specific to the District of Columbia, see Nolo's Washington, D.C. Estate Planning section.