Does Washington DC have an estate tax in 2026?

Yes. Washington DC imposes its own estate tax on residents and on DC-situs property owned by non-residents. The 2026 DC estate tax exemption is $4,988,400 — significantly lower than the federal $15M exemption. DC estate tax rates are graduated from 11.2% to 16% on the taxable estate above the exemption. Filing is on Form D-76, due within 10 months of death.

Is DC estate tax portable between spouses?

No. DC estate tax has no portability. When the first spouse dies, their DC exemption of $4,988,400 cannot be transferred to the surviving spouse. Without a bypass (credit shelter) trust, the first spouse's exemption is wasted — and the surviving spouse's estate is taxed with only one exemption at death. For a $10M married DC couple, failing to use a bypass trust can cost $600,000–$700,000 in avoidable DC estate tax.

Does DC have a gift tax?

No. Washington DC has no gift tax and no lookback period on lifetime gifts. Annual gifts within the federal exclusion ($19,000 per recipient per year in 2026; $38,000 with gift splitting) reduce the DC taxable estate without any DC gift tax consequence. Larger gifts use federal lifetime exemption but still escape DC estate tax permanently. Annual gifting is one of the most effective DC estate tax reduction strategies.

What is a bypass trust and how does it help DC residents?

A bypass trust (also called a credit shelter trust or B trust) holds an amount equal to the first spouse's DC estate tax exemption ($4,988,400 in 2026) at the first spouse's death. The trust assets are not included in the surviving spouse's taxable estate — effectively doubling the exemption available to a married couple. On a $10M DC estate, a properly structured bypass trust can reduce DC estate tax from roughly $660,000 to near zero by using both spouses' exemptions.

Does DC estate tax apply to Maryland or Virginia residents who own DC real estate?

Yes. DC estate tax applies to DC-situs property — primarily real estate physically located in the District — regardless of the owner's state of domicile. A Maryland resident who owns a DC rental property or investment property will owe DC estate tax on that property's value above the DC exemption, even though their primary estate is taxed in Maryland. For larger DC property holdings, this can create significant DC estate tax exposure that requires coordination across both state jurisdictions.

What DC estate planning strategies work best for federal employees and contractors?

Federal employees and contractors often accumulate large TSP (Thrift Savings Plan) and pension balances alongside DC real estate. Key strategies include: naming the surviving spouse as primary TSP beneficiary to defer income and estate tax; considering a bypass trust to use both DC exemptions; systematic annual gifting ($19,000/donee/year, no DC gift tax) to reduce the estate over time; and coordinating Roth conversions to shift IRD (Income in Respect of a Decedent) into tax-free Roth accounts. Pension survivors benefit elections also interact with the estate plan and should be reviewed.

How does DC estate planning differ for single vs. married residents?

Married DC residents have access to the marital deduction (all assets passing to a US citizen spouse are exempt from DC estate tax at first death) and the bypass trust strategy (using both spouses' exemptions). Single DC residents have one exemption ($4,988,400) and no portability — so an $8M single DC resident's estate owes DC estate tax on roughly $3M above the exemption, approximately $400,000–$430,000 at graduated rates. Single HNW DC residents have fewer structural options and typically rely more heavily on annual gifting, irrevocable trusts (SLAT is unavailable without a spouse), and charitable giving strategies.

Washington DC Estate Planning 2026: Estate Tax, No Portability, and Why the Bypass Trust Is Essential

Washington DC imposes its own estate tax — and it applies at a $4,988,400 exemption in 2026, far below the federal threshold of $15 million. For most DC residents with sizable estates, the federal estate tax is now a non-issue thanks to the One Big Beautiful Bill Act's permanent $15M exemption. The DC estate tax is the real exposure. Worse: DC has no portability. A married couple who passes everything to the surviving spouse at first death wastes the first spouse's DC exemption entirely — and the surviving spouse's estate gets taxed using only one exemption. On a $10M DC estate, that oversight costs roughly $660,000 in DC estate tax that a properly structured bypass trust eliminates. This guide explains DC estate tax rates, the bypass trust strategy, annual gifting mechanics, and how DC situs property affects Maryland and Virginia residents who own DC real estate.

Washington DC estate tax quick facts (2026): DC estate tax exemption: $4,988,400 (inflation-indexed annually).¹ DC estate tax rates: 11.2%–16% (graduated; applied to taxable estate above the exemption).¹ DC portability: None — each spouse gets one exemption, use it or lose it. DC gift tax: None — no lookback period; gifts permanently reduce the DC taxable estate. DC inheritance tax: None (DC has no inheritance tax). Form D-76 due: 10 months after date of death. Federal estate tax exemption: $15,000,000 per person (OBBBA, permanent).² Federal annual gift exclusion: $19,000 per recipient ($38,000 with gift splitting).²

Who pays DC estate tax?

DC estate tax applies to two groups of people:

DC residents: Individuals domiciled in Washington DC at the time of death owe DC estate tax on their entire gross estate — all assets, regardless of where those assets are located — to the extent the estate exceeds $4,988,400.
Non-DC residents who own DC-situs property: Maryland and Virginia residents who own real estate physically located in the District of Columbia owe DC estate tax on the value of that DC property — even though their primary estate is taxed in their home state. A Bethesda, Maryland resident who owns a DC investment condo at death has DC estate tax exposure on the condo's value, plus Maryland estate tax exposure on the rest of their estate.

DC's $4,988,400 exemption sounds high until you account for how DC's housing market interacts with retirement accounts and investment portfolios. A senior federal agency official or long-tenured DC attorney with a Georgetown home worth $2.5M, $1.5M in a TSP and IRA, and $1.5M in a brokerage account has an estate that comfortably exceeds the DC exemption — with federal estate tax exposure of essentially zero (far below the $15M threshold), but DC estate tax on $1.5M+ of taxable estate.

DC estate tax rates — what the graduated schedule actually costs

DC estate tax rates run from 11.2% to 16% on the amount above the exemption, applied progressively as the taxable estate grows. The rate calculation follows Form D-76 and its instruction booklet.¹ The table below shows approximate DC estate tax at common estate sizes for a DC resident who is single or a surviving spouse without a bypass trust.

Gross Estate	Taxable Amount (above $4.99M exemption)	Approximate DC Estate Tax	Effective Rate on Total Estate
$5,000,000	~$12,000	~$1,300	<0.1%
$6,000,000	~$1,012,000	~$115,000–$128,000	~1.9%–2.1%
$8,000,000	~$3,012,000	~$390,000–$430,000	~4.9%–5.4%
$10,000,000	~$5,012,000	~$640,000–$700,000	~6.4%–7.0%
$15,000,000	~$10,012,000	~$1,450,000–$1,600,000	~9.7%–10.7%
$20,000,000	~$15,012,000	~$2,300,000–$2,500,000	~11.5%–12.5%

Approximate estimates for illustration; exact DC estate tax requires computation per Form D-76 instructions using the official rate schedule. Federal estate tax not applicable to estates below $15M (OBBBA, verified 2026). DC estate tax verified via OTR (otr.cfo.dc.gov) and Form D-76 instructions, August 2026.

For context: a $10M DC estate owes zero federal estate tax (well below the $15M threshold) but roughly $640,000–$700,000 in DC estate tax — a significant exposure that is entirely a state-level problem. The planning imperative for most DC residents in the $5M–$15M range has shifted from federal to local.

The portability trap — why DC married couples must use a bypass trust

Federal estate tax allows "portability" — when the first spouse dies, any unused portion of their federal $15M exemption transfers automatically to the surviving spouse, who can then use up to $30M in combined federal exemption. DC has no portability. Every DC resident gets exactly one DC exemption of $4,988,400. When the first spouse dies, that exemption either gets used or disappears.

What happens without a bypass trust

Without planning, most married DC couples rely on the unlimited marital deduction: all assets pass to the surviving spouse at first death, with no estate tax (federal or DC) on the transfer. This works for the first death. But the surviving spouse then holds the combined estate with only one DC exemption at their death. On a $10M estate:

First death: everything passes to survivor. No DC tax. First spouse's $4.99M DC exemption is wasted permanently.
Second death: survivor's estate = $10M. DC taxable estate = $10M − $4.99M = $5.01M. DC estate tax: approximately $640,000–$700,000.

How a bypass trust preserves both exemptions

A bypass trust (also called a credit shelter trust or B trust) is drafted into the estate plan so that at the first death, an amount equal to the deceased spouse's DC exemption ($4,988,400) flows into a trust — instead of passing outright to the survivor. The trust assets are managed for the surviving spouse's benefit (income, principal for health and support needs) but are not counted as part of the survivor's taxable estate at death. Result:

First death: $4.99M into bypass trust, using the first spouse's DC exemption. Zero DC tax at first death. Remaining assets pass to surviving spouse via marital deduction.
Bypass trust grows over the surviving spouse's lifetime — still not in the survivor's taxable estate.
Second death: survivor's own assets (minus the $4.99M already in bypass) are subject to the survivor's DC exemption. On a $10M estate, each spouse has roughly $5M; each exemption shelters that share. DC estate tax: near zero.

Scenario	Estate Value	DC Exemptions Used	Approximate DC Estate Tax	Savings
No bypass trust — marital deduction only	$10,000,000	1 (second death only)	~$660,000	—
Bypass trust in place	$10,000,000	2 (one at each death)	~$0–$5,000	~$655,000+ saved
No bypass trust — marital deduction only	$15,000,000	1 (second death only)	~$1,500,000	—
Bypass trust in place	$15,000,000	2 (one at each death)	~$640,000–$700,000	~$800,000+ saved

Bypass trust vs. federal portability: DC residents still benefit from federal portability at the federal level — file Form 706 within 9 months of the first death (or extend via Form 4768) to preserve the deceased spouse's federal exemption. But filing Form 706 for federal portability does not create DC portability. You need both: a bypass trust for the DC exemption AND a timely Form 706 election for the federal exemption. See our portability election guide for Form 706 mechanics.

Talk to a DC estate planning advisor about structuring your bypass trust →

Annual gifting — no DC gift tax makes this DC's most underused strategy

Washington DC has no gift tax and no lookback period. Every dollar you give away during your lifetime permanently leaves your DC taxable estate — there is no mechanism for DC to recapture lifetime gifts the way a state gift tax would. The federal annual exclusion of $19,000 per recipient per year in 2026 ($38,000 for married couples using gift splitting) applies, but DC imposes no additional state-level consequence on lifetime transfers.

What systematic annual gifting accomplishes for DC residents

For a married DC couple making annual gifts of $38,000 to each of three adult children:

Annual gifting: $38,000 × 3 children = $114,000 per year removed from the DC taxable estate.
Over 10 years: $1,140,000 transferred with no DC estate tax, no DC gift tax, and no federal gift tax (within annual exclusion).
DC estate tax avoided: If the marginal DC estate tax rate on that $1.14M would have been approximately 14%, annual gifting saves roughly $160,000 in DC estate tax over the 10-year period.

Add IRC §2503(e) direct payments for tuition and medical expenses — unlimited, excluded from both federal gift tax and annual exclusion limits — and a DC couple with grandchildren can transfer significantly more without any gift tax consequence.

For DC residents with larger estates who want to accelerate beyond annual exclusion amounts, lifetime gifts use federal exemption but still permanently escape DC estate tax. An $8M DC estate gifting $3M into an IDGT (Intentionally Defective Grantor Trust) pays gift tax on $0 (within the $15M federal exemption) while removing $3M plus all future appreciation from the DC taxable estate. See our IDGT guide for mechanics.

DC situs property — the Maryland and Virginia resident trap

Many HNW residents in Montgomery County, Maryland or Fairfax County, Virginia own investment property in Washington DC — a rental townhouse in Capitol Hill, a commercial condo in Dupont Circle, an interest in a DC investment partnership. These DC residents-in-name-only face a two-state estate tax problem that most advisors in suburban Maryland or Virginia miss.

How DC situs property creates dual estate tax exposure

A Maryland resident who owns a DC rental property with a date-of-death fair market value of $1,500,000:

Maryland estate tax applies to the entire estate (worldwide assets) of a Maryland domiciliary, subject to the Maryland exemption ($2M in 2026).
DC estate tax applies to DC-situs real property owned by a non-DC resident, regardless of whether the overall estate exceeds the DC exemption.
The DC estate tax return (Form D-76 for non-residents) must be filed, even if the only DC asset is one rental property.
Credit for taxes paid to DC may partially offset Maryland estate tax on the same asset — but the coordination is not automatic and requires coordinated planning.

The problem compounds for Northern Virginia residents whose net worth includes appreciated DC real estate. A Virginia resident (no Virginia estate tax) with $5M in VA assets and $2M in DC real estate has zero Virginia estate tax but approximately $128,000–$150,000 in DC estate tax on the DC property above the DC exemption. See our Maryland estate planning guide for Maryland-DC interaction details.

Strategies for federal employees and DC contractors

DC is home to a disproportionate number of federal employees, senior SES officials, and defense and intelligence contractors — all of whom accumulate substantial wealth through pensions, TSP balances, and deferred compensation alongside DC real estate.

TSP and retirement account planning in a DC estate context

Federal employees' Thrift Savings Plan (TSP) balances are treated as ordinary IRA assets for estate tax purposes — included in the gross estate at date-of-death value, contributing to the DC taxable estate. A federal employee who retires as a GS-15 or SES officer may have a TSP balance of $800,000–$1.5M plus a FERS pension with survivor benefit, a DC or suburban home with significant appreciation, and a brokerage account — often totaling $5M–$8M or more.

Key strategies for this profile:

Roth TSP / Roth conversions: Converting traditional TSP and IRA balances to Roth reduces the IRD (Income in Respect of a Decedent) burden on heirs while the Roth balance is still included in the DC taxable estate for DC estate tax purposes. The tradeoff is worth modeling: less income tax for heirs, same DC estate tax exposure, but the estate is paying income tax today at known rates rather than forcing heirs into higher brackets under the 10-year distribution rule.
Beneficiary designations: For TSP accounts, the survivor benefit election for a FERS pension can interact with the estate plan. Review both TSP beneficiary forms and the pension survivor benefit election as part of the broader DC estate tax analysis.
Annual gifting with TSP in accumulation: If retirement is still years away, systematic annual gifting from taxable accounts reduces DC estate tax exposure as the TSP grows tax-deferred — a coordinated approach to managing the overall trajectory of the DC taxable estate.

FERS pension survivor benefit election

FERS pension survivor benefit elections are irrevocable once made at retirement. The survivor benefit costs the federal retiree a percentage of the pension but guarantees an income stream to the surviving spouse. For DC estate tax planning: the present value of a pension survivor benefit is generally not included in the DC gross estate (annuity interests are excluded), but life insurance used as an alternative to the survivor benefit is included unless held in an ILIT. The interaction matters for DC residents who are weighing pension survivor benefits against life insurance alternatives.

DC vs. Maryland vs. Virginia — estate tax comparison for the DC metro area

Jurisdiction	2026 Exemption	Top Rate	Portability	Gift Tax	Inheritance Tax
Washington DC	$4,988,400	16%	No	No	No
Maryland	$5,000,000	16%	Yes (via MET-1)	No	Yes (10% collateral heirs)
Virginia	No estate tax	—	—	No	No
Federal	$15,000,000	40%	Yes (Form 706)	No (unified)	No

Maryland estate tax exemption $5M per spouse (portability via MET-1 — one of few states with portability). Virginia eliminated state estate tax in 2005. DC exemption $4,988,400 verified via DC OTR 2026 D-76 instructions.¹

The relocation consideration: DC residents with estates in the $5M–$15M range are effectively paying DC estate tax while facing zero federal estate tax. Moving domicile to Virginia eliminates state estate tax entirely. This requires a genuine change of domicile — physical relocation, updated driver's license, voter registration, and documentation of intent — not merely purchasing a Virginia vacation property. DC will investigate domicile if the estate is large and the relocation is recent. Many DC residents weigh the lifestyle economics of DC vs. Northern Virginia against potential DC estate tax savings of $640,000–$1.5M+ on larger estates.

DC estate planning case study: the Hendersons

Michael and Patricia Henderson, both age 67, have lived in Washington DC's Chevy Chase neighborhood for 25 years. Michael retired after 32 years as a senior federal agency official; Patricia is a retired partner at a DC law firm. Their estate at the time of this analysis:

$2,800,000 — primary residence (purchased for $380,000 in 1999, now appraised at $2.8M)
$1,600,000 — Michael's TSP and FERS pension survivor benefit
$1,400,000 — Patricia's IRA and 401(k) rollovers
$1,200,000 — joint taxable brokerage account (low basis; primarily appreciated equity)
$500,000 — DC rental condo (purchased $220K; now $500K)
Total: $7,500,000

Without planning:

Federal estate tax: $0 (far below the $15M threshold).
DC estate tax at Michael's death: $0 — everything passes to Patricia via marital deduction. Michael's $4.99M DC exemption is wasted permanently.
DC estate tax at Patricia's death: $7,500,000 − $4,988,400 = $2,511,600 taxable. Approximate DC estate tax: ~$330,000–$360,000.

With a coordinated plan including bypass trust and annual gifting:

Bypass trust funded at Michael's death: $4,988,400 in trust assets (part of home equity + brokerage). The bypass trust grows for Patricia's lifetime — not in her taxable estate.
Annual gifting during lifetime: $38,000/year to each of two adult children = $76,000/year transferred with no DC or federal gift tax. Over 10 years: $760,000 removed from the estate.
Federal portability election: File Form 706 within 9 months of Michael's death to preserve his federal DSUE (over $15M — no federal tax exposure anyway, but preserves federal portability as a backstop).
Roth conversions during retirement: Convert $150,000–$200,000 per year from TSP/IRA to Roth, managing tax brackets. Reduces eventual IRD tax burden on children under the 10-year distribution rule.
DC estate tax at Patricia's death after planning: Patricia's remaining estate after bypass trust and 10 years of gifting is approximately $2.5M. DC exemption $4.99M (or adjusted for inflation). DC estate tax: approximately $0.
Total DC estate tax savings: ~$330,000–$360,000.

The coordination challenge: DC estate planning for federal employees and professionals requires coordinating DC estate tax, federal estate tax (which affects estates above $15M), income tax on retirement distributions, beneficiary designations, and trust structure — across at least three advisors (estate attorney, tax advisor, financial planner). A fee-only financial advisor who specializes in DC estate planning quarterbacks this coordination, models the combined DC and federal tax impact, and ensures the financial plan aligns with what the attorney drafts.

Get matched with a fee-only advisor specializing in DC estate planning →

Common trust strategies for DC residents

Spousal Lifetime Access Trust (SLAT)

A SLAT allows one spouse to gift assets (up to the $15M federal exemption) into an irrevocable trust for the other spouse's lifetime benefit — permanently removing those assets from the donor spouse's DC taxable estate. For DC residents well above the $4.99M DC exemption, a properly structured SLAT reduces the DC taxable estate while preserving the beneficiary spouse's access to the trust assets. See our SLAT guide for mechanics, the dual-SLAT strategy for larger estates, and the reciprocal trust doctrine traps.

GRAT for DC residents with appreciating assets

A Grantor Retained Annuity Trust (GRAT) transfers appreciation above the §7520 hurdle rate (5.20% as of August 2026) to the remainder beneficiary with no federal gift tax. The transferred appreciation permanently escapes the DC taxable estate. GRATs work especially well for DC area professionals with concentrated positions in publicly traded securities or pre-liquidity private equity — assets expected to significantly outpace the §7520 rate. See our GRAT calculator.

Charitable Remainder Trust (CRT) for appreciated DC real estate

DC area real estate with a very low basis (homes purchased in the 1980s–1990s, rental properties with decades of depreciation) is a natural candidate for a Charitable Remainder Trust. The CRT sells the appreciated property without immediate capital gains recognition, invests the proceeds, provides an income stream to the donor for life or a term, and passes the remainder to charity at death. The transferred asset leaves the DC taxable estate permanently. See our CRT guide.

Seven most costly DC estate planning mistakes

Relying on marital deduction at first death without a bypass trust. The most expensive DC estate planning mistake. Every DC couple who passes everything to the surviving spouse at first death wastes one $4.99M DC exemption permanently. On a $10M estate, that costs approximately $660,000 in avoidable DC estate tax.
Confusing federal portability with DC portability. Filing Form 706 to elect federal DSUE does nothing for DC estate tax. Many DC advisors who are primarily federal-law focused miss this distinction. Federal portability and DC portability are independent — DC has none.
Letting the DC home's appreciation go unaddressed. A DC home purchased in the 1980s or 1990s for $200K–$400K may now be worth $2M–$4M. That appreciation is locked into the DC taxable estate unless addressed through gifting, trusts, or a legitimate change of domicile. It is the largest single asset driving many DC residents above the $4.99M threshold.
Non-DC residents owning DC property without a DC estate plan. Maryland and Virginia residents with DC investment properties frequently have no DC-specific estate plan. The DC estate tax on that property applies regardless — and the Form D-76 non-resident return must be filed. Missing it triggers late-filing penalties and interest.
Failing to use annual gifting systematically. No DC gift tax and no lookback makes annual gifting one of the most effective DC estate tax tools. A DC couple who never gifts $19,000/donee loses years of exemption-reduction opportunity. Over 15 years with two children, $570,000 could have been permanently removed from the DC taxable estate at zero gift tax cost.
Ignoring the IRD problem in TSP and IRA accounts. Large TSP and IRA balances are included in the DC taxable estate at full face value and will be subject to income tax on distribution to heirs. The combined DC estate tax plus income tax burden on inherited retirement accounts can be severe. Roth conversions and strategic beneficiary designations mitigate this.
Not reviewing the estate plan after the OBBBA made federal exemption permanent. Prior plans drafted for the "2026 sunset" (which assumed the federal exemption would drop from $14M to $7M) were optimized for federal tax minimization. The OBBBA's permanent $15M exemption means many DC residents with $5M–$14M estates now have zero federal exposure but significant DC exposure — requiring a rebalanced plan focused on DC, not federal, strategies.

Work with a fee-only advisor who specializes in DC estate planning

Washington DC estate planning sits at the intersection of DC estate tax (no portability, $4.99M exemption), federal tax (OBBBA $15M exemption, SECURE 2.0 retirement rules), retirement plan complexity (TSP, FERS pension, IRA rollovers), and some of the highest-appreciation real estate in the country. A fee-only financial advisor who specializes in DC estate planning helps you model the combined DC and federal tax impact, identify which trust structure fits your estate composition, and coordinate the implementation with your trust-and-estates attorney.

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Content is for informational purposes only and does not constitute financial, tax, or legal advice. Estate planning requires coordination with a qualified trust-and-estates attorney.

Sources

DC Office of Tax and Revenue — Estate, Inheritance and Fiduciary Tax Information. DC estate tax exemption $4,988,400 for 2026, Form D-76 instructions, rate schedule 11.2%–16%, 10-month filing deadline. Verified August 2026.
IRS — Estate and Gift Taxes. Federal estate tax exemption $15M per person (OBBBA, permanent); annual exclusion $19,000 per recipient for 2026 per Rev. Proc. 2025-28. No portability countdown needed post-OBBBA.
DC Form D-76 Instructions (2026). Official DC estate tax return instructions including exemption amount, rate table, and non-resident filing requirements for DC-situs property.
Bulman, Dunie, Burke & Feld — Federal and State Estate and Gift Taxes in 2026. DC-area estate planning law firm analysis of 2026 DC and federal estate tax changes, OBBBA impact, and DC-specific planning considerations.
SmartAsset — Guide to the Washington DC Estate Tax. Overview of DC estate tax rates, exemption, portability rules, and filing requirements for DC residents and non-resident property owners.

All tax values verified as of August 2026. DC estate tax exemption $4,988,400 for calendar year 2026, per DC OTR official guidance. Federal values reflect OBBBA (One Big Beautiful Bill Act, July 2025) and IRS Rev. Proc. 2025-28.