Quick answer: if you live in Virginia or Maryland and commute into Washington, DC, you don't pay DC income tax on your wages. DC is barred by federal law from taxing the wages of people who don't live there. Your home state taxes your pay instead, and your employer should withhold for that state. You give your employer DC Form D-4A to confirm you're a non-resident.
Why DC can't tax commuters
Most states tax non-residents on income earned inside their borders. DC is different: the federal law that set up DC's self-government doesn't allow it to tax the personal income of non-residents. So the 4% to 10.75% DC brackets only ever apply to people who live in the District.
That makes your home state the only state-level tax on your wages.
What you pay if you live in Virginia
Virginia taxes your full salary at its own graduated rates, with a top rate of 5.75%. Your DC employer should be registered to withhold Virginia tax and should take it from each paycheck. You file a Virginia resident return as normal, and there's no DC return to file.
What you pay if you live in Maryland
Maryland residents pay two layers: Maryland state income tax and a local income tax set by the county (or Baltimore City) where you live. Both are withheld from your pay and both apply to your full salary, including wages earned in DC. You file one Maryland resident return, which covers state and local tax together.
Because the county layer adds a meaningful amount, a Maryland commuter can pay more total state and local tax than a Virginia commuter on the same salary. Check your county's current rate on the Comptroller of Maryland's website.
What your employer needs from you
- DC Form D-4A, the Certificate of Nonresidence in the District of Columbia. It tells your employer not to withhold DC tax.
- Your home state's withholding form: Virginia Form VA-4 or Maryland Form MW507.
If you skip the D-4A, your employer may withhold DC tax by mistake. You'd then have to file a DC return to get that money back, while also owing your home state.
What if DC tax was withheld by mistake?
Look at box 15 to 17 of your W-2. If DC appears with tax withheld, you can file a DC return to claim a refund of the DC tax as a non-resident, and pay your home state the tax it's owed. Then give your employer a D-4A so it doesn't happen again.
If you move into DC
Once you live in DC, you're a DC resident and the DC brackets apply. In the year you move, you're a part-year resident of both places: DC taxes income earned while you lived in DC, and your old state taxes income earned while you lived there.
To see what a DC resident pays on your salary, use the DC paycheck calculator. For the brackets in detail, see DC income tax brackets explained.
A worked example for each state
Take a commuter earning $80,000 with no pre-tax deductions.
Living in Virginia: Virginia's graduated rates reach 5.75% on income above $17,000, after Virginia's own deductions and exemptions. The whole salary is taxed by Virginia; nothing goes to DC.
Living in Maryland: Maryland's state rates apply to the full salary, then the county's local income tax is added on top. Depending on the county, the local layer can add a meaningful amount a year.
Living in DC instead: the same $80,000 salary would have $63,900 of DC taxable income and pay about $3,832 in DC tax, using the DC paycheck calculator.
The point isn't that one place is always cheaper. It's that only one place taxes your wages: wherever you live.
Common mistakes commuters make
Forgetting the D-4A after a new job. Each employer needs its own copy. A new employer that defaults to DC withholding will take tax you don't owe.
Assuming remote days change anything. Because DC doesn't tax non-residents at all, working from home in Virginia or Maryland doesn't change your DC position. It's still zero.
Missing the Maryland county. Maryland residents sometimes set up state withholding but leave the county blank or wrong on Form MW507, which leads to a bill at tax time.
Not updating after a move. If you move from Virginia to Maryland, or into DC, update every withholding form the same month.
What about DC unemployment and other payroll items?
Your employer may still pay DC unemployment insurance on your wages, because that's based on where the work is done and is an employer cost, not a tax taken from your pay. It doesn't appear as a deduction on your paystub and doesn't affect your income tax.
Quick checklist
- File D-4A with your DC employer.
- File VA-4 or MW507 for your home state.
- Check your first paystub: there should be a Virginia or Maryland tax line and no DC tax line.
- If DC tax was withheld, file a DC non-resident return for a refund and fix your forms.