What changed this year in "DMV" taxes

May 5

3 min read

Tax laws in the DMV area (District of Columbia, Maryland, and Virginia) often shift to reflect economic conditions, policy goals, and budget needs. This year brought several important changes that affect residents and businesses alike. Understanding these updates can help you plan better, avoid surprises, and take advantage of new opportunities.

Eye-level view of a DMV area tax office building with a flagpole — DMV tax office building with flagpole

New tax brackets and rates

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One of the most noticeable changes this year involves adjustments to income tax brackets and rates in Maryland and Virginia. These changes reflect inflation adjustments and policy decisions aimed at balancing revenue and taxpayer relief.

Maryland increased its top income tax rate slightly, affecting those earning over $250,000. The new top rate is 5.75%, up from 5.5%. This change means higher earners will pay a bit more in state income tax.
Virginia adjusted its brackets to provide relief for middle-income earners. The lowest bracket now covers incomes up to $17,000, up from $5,000, reducing tax liability for many taxpayers.
District of Columbia maintained its progressive tax structure but increased the standard deduction slightly to help offset inflation.

These changes mean taxpayers should review their withholding and estimated payments to avoid underpayment penalties or unexpected tax bills.

Property tax updates

Property taxes in the DMV area saw some shifts, especially in Maryland counties and the District of Columbia.

Several Maryland counties increased their property tax rates by small margins, generally between 0.1% and 0.3%. These increases fund local school improvements and infrastructure projects.
The District of Columbia introduced a new property tax credit for seniors and disabled residents with incomes below $60,000. This credit can reduce property tax bills by up to $1,000.
Virginia did not change its statewide property tax rates but allowed some localities to adjust rates within limits set by the state.

If you own property in the DMV, check your local tax authority’s website for updated rates and any new credits or exemptions you may qualify for.

Sales tax changes and exemptions

Sales tax rates remained mostly stable, but there were notable changes in exemptions and taxable items.

Maryland expanded its sales tax exemption to include certain feminine hygiene products, making these items tax-free starting this year.
Virginia introduced a temporary exemption on energy-efficient appliances purchased between January and June. This move encourages residents to upgrade to greener technology.
The District of Columbia clarified rules around online sales tax collection, requiring more out-of-state sellers to collect and remit DC sales tax.

These changes affect both consumers and businesses. Retailers should update their systems to reflect new exemptions and collection rules, while shoppers can benefit from savings on specific items.

Close-up view of a cash register screen showing sales tax calculation — Cash register screen showing sales tax calculation

Business tax updates

Businesses in the DMV region face new rules and rates that impact their tax planning and compliance.

Maryland increased its corporate income tax rate from 8.25% to 8.5%. This change affects C-corporations but not pass-through entities like LLCs or S-corporations.
Virginia introduced a new tax credit for small businesses that invest in employee training programs. Eligible businesses can claim up to $5,000 annually.
The District of Columbia expanded its gross receipts tax base to include certain digital services, such as streaming and online advertising, which were previously untaxed.

These updates require businesses to review their tax filings carefully and consider new credits or liabilities when budgeting.

Changes to tax filing deadlines and procedures

This year, the DMV tax authorities made some procedural changes to ease filing and payment.

Maryland extended the deadline for individual income tax returns by two weeks, moving it from April 15 to April 30. This extension applies only to the current tax year.
The District of Columbia introduced an online portal for property tax payments, making it easier for residents to pay and track their bills.
Virginia simplified the process for requesting payment plans on overdue taxes, allowing taxpayers to apply online without needing to visit a tax office.

These changes aim to reduce taxpayer stress and improve compliance by offering more flexibility and convenience.