Active-duty pay
Taxed
Active-duty pay taxable to DC residents.
State Guide · DC
District of Columbia — Military Tax Treatment
DC taxes everything: active duty pay, military retirement, SBP, Guard drill pay. DC is one of the worst jurisdictions in the country for military retirees from a state/local tax perspective. Factor this into retirement location planning if you're considering DC domicile.
Tax treatment at a glance
Guard & Reserve drill pay
Taxed
Guard and Reserve drill pay is taxable DC income. DC has no military-specific income exemptions.
Military retirement pay
Taxed
Military retirement pay fully taxable in DC — one of the only jurisdictions without a military retirement exemption.
The numbers · verified for tax year 2025
Top marginal rate
10.75%
Retirement-pay exemption
Taxed
DC fully taxes military retired pay — there is no exclusion or reduction for the retiree. (The only related break is a survivor exclusion for SBP/RCSBP/RSFPP annuities for survivors age 62 or older.)
Standard deduction
DC uses its own standard deduction ($15,000 single / $30,000 MFJ for 2025 — it declined to adopt the higher federal amount). The top rate is 10.75% on income over $1M.
VA disability compensation
Always tax-free
Federally tax-free under 38 USC § 5301. No state taxes VA disability compensation as income — District of Columbia included.
Survivor Benefit Plan (SBP)
Follows retirement
DC taxes military retirement — SBP annuities are fully taxable in DC.
Federal rules that override state law
SCRA — Servicemembers Civil Relief Act
Active-duty servicemembers pay state income tax only to their state of legal domicile — not the state where they are stationed. If you are from Texas and stationed in District of Columbia, District of Columbia cannot tax your military pay. This applies during all active duty periods and during Guard/Reserve mobilizations on federal (Title 10) orders.
MSRRA — Military Spouses Residency Relief Act
Military spouses can maintain their home-state domicile even when living in a different state due to their servicemember's orders. A spouse who is a Texas resident following their servicemember to District of Columbia can keep Texas as their tax domicile and avoid District of Columbia state income tax on their wages.
Guard & Reserve — the SCRA gap
SCRA pay protections apply during federal (Title 10) activation orders. During routine drill weekends and state-only activations, Guard and Reserve members are state residents serving in their home state — SCRA does not protect their drill pay from state income tax. Whether District of Columbia exempts that pay is the state-specific question answered above.
Filing watch-outs
- 01No military-specific deductions or exemptions on DC Form D-40
- 02DC taxes military retirement as ordinary income — no special treatment
Veteran-specific tax benefits
Limited DC-specific veteran tax benefits.
Official authority
https://otr.cfo.dc.gov/ ↗State tax law changes annually. Verify current rules with the District of Columbia Department of Revenue before making any tax decision.
District of Columbia military tax — common questions
Does District of Columbia tax military retirement pay in 2026?
District of Columbia taxes military retirement pay. Military retirement pay fully taxable in DC — one of the only jurisdictions without a military retirement exemption.
Does District of Columbia tax active-duty military pay?
District of Columbia taxes active-duty military pay for state residents. Active-duty pay taxable to DC residents. Under the SCRA, District of Columbia can only tax the military pay of service members who are legally domiciled in District of Columbia — not those merely stationed there.
Does District of Columbia tax National Guard and Reserve drill pay?
District of Columbia taxes Guard and Reserve drill pay. Guard and Reserve drill pay is taxable DC income. DC has no military-specific income exemptions.
Is VA disability compensation taxed in District of Columbia?
No. VA disability compensation is federally tax-free under 38 U.S.C. § 5301, and no state — including District of Columbia — taxes it as income.
If I'm stationed in District of Columbia but claim another state, can District of Columbia tax my military pay?
No. Under the Servicemembers Civil Relief Act (SCRA), active-duty pay is taxable only by your state of legal domicile, not the state where you are stationed. If your domicile is elsewhere, District of Columbia cannot tax your active-duty military pay. Military spouses get the same protection under the MSRRA.
Related tools
Other state guides