The Cost of Living in the Washington DC Area
Everyone knows that the DC area is an expensive place to live. Real estate prices and property taxes are among the highest in the nation. Not to mention that everyday necessities like groceries and gas cost more here, making the cost of living in the Washington DC area quite steep.
Within the DC area, certain cities are more expensive than others. Here we’ve outlined the cost of living in the Washington DC area using various tax rates (property, income, and car) for the major nearby jurisdictions in Virginia and Maryland, plus the District.
PROPERTY TAX RATES
All property tax rates are per $100 of assessed home value.
Falls Church City – $1.355
Manassas City – $1.268
Fairfax County – $1.150
Loudoun County – $1.150
Alexandria City – $1.13
Fairfax City – $1.06
Arlington County – $0.993
Prince William County – $0.90
Montgomery County – $ .7414 base plus*
*each jurisdiction has other fees added. This chart outlined the rates for each area.
Prince George’s County – varies by jurisdiction. This document outlines the rates by city.
Washington DC $0.85
Be sure to read our related post on property taxes and their benefits.
STATE INCOME TAX
State-level income tax rates are not standardized like the federal government’s. In fact, several states do not even have an income tax, relying on other funding sources for their service and programs.
According to thebalance.com’s February 2019 data, our local state income tax rates are:
Maryland: 2 to 5.75 percent. The highest rate applies to incomes over $250,000.
Virginia: 2 to 5.75 percent. The highest rate applies to incomes over $17,000.
DC: 4 to 8.95 percent. The highest rate applies to incomes over $1 million.
As a basic example, a single individual making $125,000 per year will owe the following STATE taxes:
Virginia: $6,704 based on a 5.75 percent marginal rate and 5.36 percent effective rate
Maryland: $5,768 based on a 5 percent marginal rate and 4.61 percent effective rate
DC: $8,120 based on an 8.5 percent marginal rate and 6.5 percent effective rate
Virginia is the only state of the three to levy a personal property tax, or as it is more commonly known, “car” tax. In fact, Virginia’s car tax is actually the second highest of the states that do charge a car tax, second only to Rhode Island. Virginia residents pay a sizable $962 annual car tax on average.
So what does the tax situation look like in three DC-area jurisdictions for a couple that earns $150,000, owns a $650,000 property and one $25,000 car?
Alexandria: $7,916 (VA income tax) + $7,345 (1.13 Alexandria property tax rate) + $1,037.50 (Virginia’s .0415 car tax rate) = $16,298.50
DC: $9,340 (DC income tax) + $5,525 (.85 DC property tax rate) + $0 car tax = $14,865
Friendship Heights: $7,113 (MD income tax) + $10,612.55 (1.6327 property tax rate in Friendship Heights neighborhood) + $0 car tax = $17,725.55
State income taxes calculated using smartasset.com.
THE BOTTOM LINE
While the District has the highest state income taxes, they are offset by relatively low property tax rates. Montgomery County property taxes vary greatly depending on the jurisdiction. Be sure to check the specific rates of the various jurisdictions you’re considering – they can make a big difference in your monthly housing costs.
Are you trying to decide which part of the DC metro area to call home? We’d love to help. Let’s start the conversation or better yet, sign up for one of our neighborhood orientation tours.
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