Arlington’s commercial real estate market has many challenges, but one factor working in its favor may be D.C.’s tax code.
Taxes across the Potomac have come into the crosshairs of Republican lawmakers since a wave of progressive politicians swept the Democratic primaries in D.C.
A bill introduced last month by Rep. James Comer (R-Kentucky) would prevent the D.C. Council from adding any new taxes or amending its tax code without approval from Congress. The legislation faces headwinds in the Senate and has outraged many of D.C.’s elected officials, who argue that it could tank the District’s credit rating and severely limit its ability to raise revenue.
Regardless of what lawmakers in Congress and D.C.’s Wilson Building decide, however, Arlington’s commercial real estate market already appears to benefit from its counterpart’s tax laws.
Data shows that the owners of many Arlington commercial properties pay a pretty penny, but it’s considerably less than they would be taxed on the other side of the river.
How commercial real estate taxes work in Arlington
Arlington County Board members earlier this year set a base tax rate of $1.053 per $100 assessed valuation on residential and commercial property, up 2 cents from 2025.
But on top of the base rate, there are add-ons to be considered, as well:
- Owners of all types of property are liable for stormwater fees, depending on the amount of impermeable surface on the lot
- All commercial property is hit with a tax surcharge of 12.5 cents per $100 for transportation
- Commercial properties in business improvement districts (Rosslyn, National Landing, Ballston) pay additional surcharges of between 4.3 cents and 7.8 cents per $100
To see how those costs play out in real-world conditions, ARLnow reviewed figures at 1700 N. Moore Street, an office building now known as Rosslyn City Center owned by American Realty Partners.
The property’s 2026 assessment is $75,943,400. Adding together the base tax rate, transportation surcharge and the 7.8-cent-per-$100 add-on because it is located in the Rosslyn Business Improvement District, the total tax rate is $1.256 per $100 and the 2026 tax bill is $953,849.08.
The stormwater surcharge adds another $5,628, bringing the total tax to $959,477.08, divided into two equal payments of $479,738.54, according to county officials.
That works out to an effective tax rate of $1.26341 per $100 assessed valuation.
In D.C., a commercial building with the same valuation would be subject to a tax rate of $1.89 per $100, totaling $1,435,330.26 — or 49.6% more than what would be paid in Arlington.
The $1.89-per-$100 rate is only applicable to D.C. properties valued at $10 million or more. Rates are $1.65 per $100 for properties valued at less than $5 million, $1.77 for properties valued at $5 million to $10 million.
A lower comparative tax rate probably won’t make or break any real-estate deals, but it would give Arlington Economic Development, under new director Anna Nissinen, a tool when holding discussions with tenants considering relocation.
The state of play in D.C.
As in Arlington, D.C. has seen a drop in the valuation of commercial properties. The factors include pre-Covid office uses, the impact of the pandemic and federal-government downsizing during the Trump administration that has metastasized into the broader regional economy.
For calendar year 2026, the assessed valuation of taxable commercial property in D.C. stands at $92.7 billion, down 7.9% from a year before and the first decline since a 7.6% drop in 2022.
As with Arlington, D.C. officials are working to find alternate sources of tax revenue. But an effort by Rep. Comer aims to give Congress more say over the District’s ability to raise additional tax revenue.
The measure from Comer, who chairs the House Committee on Oversight and Government Reform, passed its first hurdle with a 23-18 committee vote on July 22.
If enacted, it would return to Congress the power to ratify any tax and fee changes enacted by the D.C. Council.
But the measure has only picked up 21 cosponsors — all Republicans, including Virginia’s Rep. John McGuire (R-5). So it is likely the current congressional session will expire before it gets a vote in the full House of Representatives. Were it to pass, the measure would face an uncertain future in the Senate.
If enacted, it would return to Congress the power to ratify any tax and fee changes enacted by the D.C. Council.
“Faced with a billion-dollar budget hole, the D.C. Council has rejected necessary spending reforms and is instead now considering tax increases that would punish residents, burden businesses and further weaken the District’s economy,” Comer said in a statement accompanying the introduction of the legislation, called the D.C. Taxing Authority Review Act.
Comer’s measure has only picked up 21 cosponsors — all Republicans, including Virginia’s Rep. John McGuire (R-5). So it is likely the current congressional session could expire before it gets a vote in the full House of Representatives.
Even if it were to win passage there, the measure would face an uphill climb under tight deadline pressure in the Senate.
Another bill facing a difficult path to success calls for returning Arlington and Alexandria to D.C. They were part of the District from 1801 until being returned by Congress to Virginia in 1846.
The bill by Rep. Rich McCormick (R-Ga.) was introduced in April but has remained in committee since. It has picked up just two cosponsors, both Republicans, and no Virginia lawmaker of either party has backed it.
