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Virginia vs Maryland vs Washington DC Taxes (2025): Where Do You Save the Most?

Raquel Gutierrez
Sep 18
3 min read

Updated: Oct 7

Question: I recently got a job in the DC Metro area and will be moving to the area next year. I am open to living in Northern Virginia, Washington DC, or Maryland and want to know which jurisdiction offers the most favorable taxation. Answer: Congratulations on your new job (Amazon HQ2?)! There must be a lot going on in your mind right now—like whether you’re still young enough to offer your friends pizza and beer to help you move.

For years I searched for a reliable resource to send clients in response to this question, and I could never find one that compared everything clearly. So once again, I reached out to my CPA, whom I highly recommend, and together we updated a simple yet detailed chart that compares taxation between Virginia, Maryland, and Washington DC across different income levels for 2025. With that, I’ll turn this week’s column over to Chris Light and the tax experts enjoy!

First things first: Virginia, Washington DC, and Maryland all have reciprocity agreements with each other. That means if you live in one state and work in another, you only have to worry about paying taxes and filing a tax return in the state where you live, not where you work.

Let’s analyze the 2025 tax outlook of three different people who have just landed new jobs as employees in the DC Metro area:

Alex earns an AGI of $85,000, drives a vehicle valued at $18,000, and owns a home worth $450,000.
Maya earns an AGI of $150,000, drives a vehicle valued at $35,000, and owns a home worth $800,000.
Ethan earns an AGI of $300,000, drives a vehicle valued at $65,000, and owns a home worth $1,200,000.

Important Notes:

AGI, or Adjusted Gross Income, is a term used to describe a person’s income minus certain deductions. In these examples, Alex, Maya, and Ethan AGI are based on their salary levels as of 2025. AGI is then used to determine taxable income, which dictates which income tax brackets they fall into.

For consistency, all three DC vs Virginia vs Maryland taxes 2025 to take the standard deduction. Property tax rates vary by jurisdiction, but for this analysis, we’re using Arlington County’s 2025 rates for Virginia and the average Montgomery County rate for Maryland. Washington DC has a uniform property tax rate across the city.

Now let’s crunch the 2025 numbers:

📊 2025 DC vs Virginia vs Maryland taxes

Summary:

Washington DC continues to yield the lowest overall tax burden for Alex and Maya, the lower and middle-income earners. This advantage comes from DC’s generous standard deduction (aligned with federal), relatively low real estate tax rates, exemption of groceries from sales tax, and no vehicle property taxes.

For Ethan, the highest earner, Virginia emerges as the most favorable jurisdiction. The key reason is Virginia’s flat individual income tax cap at 5.75%, compared to DC’s top rate of 8.5%, which applies to much of his income. Maryland remains the costliest option across all income levels due to its combination of smaller standard deductions, higher local income tax rates, and steeper real estate tax rates.

What About Renting?

If Alex, Maya, or Ethan decide to rent close to public transportation and forgo owning a car, both real estate taxes and vehicle property taxes are eliminated from the equation. In this case, Virginia clearly takes first place for affordability across all income levels, offering the lowest overall tax liability.

What If I’m Married?

Marriage impacts taxable income significantly. For example, if Alex were married with one child, DC’s higher standard deduction ($24,000 for married filing jointly) keeps taxable income lower compared to Virginia or Maryland, even though DC does not offer exemptions or child credits. Maryland’s sizable personal exemptions ($3,200 per person) provide some relief, but its higher local income taxes still result in higher tax bills than Virginia. For most families, Virginia or DC will generally be more favorable than Maryland unless exemptions heavily outweigh deductions.

Other Factors

It’s also worth noting Virginia maintains the lowest alcohol tax by a wide margin, so even if the tax math is close, you can celebrate your new job and home with a nicer bottle of champagne in Virginia!

Below are some additional details and comparison tables outlining the tax rates in each jurisdiction.