State Taxes at a Glance – D.C.
|Type of Tax||2023|
|Individual Rates||4.00% to 10.75%|
|Corporate / Business Tax Rates||8.25 (flat tax)|
|Gross Receipts Tax||None|
|Property Taxes||0.61% as a percentage of primary home|
|Estate or Inheritance Tax||Yes – Estate|
District Income Taxes in D.C.
The District of Columbia does have an individual income tax. Like most states with income tax, it is calculated on a marginal scale, with seven (7) tax brackets. They range from 4.00% to 10.75%. The highest bracket of 10.75% starts for income greater than $1 Million.
District Business Taxes in D.C.
If you run your business in D.C. there are two types of business taxes you should be aware of:
Franchise Tax – is assessed on both C Corporation and S Corporations. The Franchise tax is a flat rate of 8.25% on all net income. There is a minimum tax of $250 if your gross receipts are under $1 Millions (or $1,000 if they are over $1 Million).
Unincorporated Franchise Tax – is assessed on other business entities (e.g. LLCs, LLPs, etc.) Unlike the Franchise Tax, if more than 80% of your gross income is from personal services, you are exempt.
District Sales and Property Taxes in D.C.
Sales Tax – since the District of Columbia is a small local district, it only has a single sales tax rate 6.00%.
Property Tax – the average property tax rate for residential property in the District of Columbia is 0.61%, which is a low property tax as far as Percent of a taxpayer’s main home.
Estate Taxes in D.C.
The District of Columbia has an estate tax that ranges between 11.2% and 16%. The first $4,528,800 dollars of the estate is exempt from tax.
D.C. DMV Fees
D.C. DMV fees not based on the value of the vehicle, rather on its weight. Therefore, they are not deductible on your individual tax return. You may look up your fees on the District of Columbia DMV website here.
D.C.’s presumption is that it’s your permanent place of abode (domicile) if you’ve lived there for over 183 days within a taxable year.
State Tax on Social Security Benefits
Even though D.C. has an income tax, social security benefits are not subject to state tax.
District Payroll taxes in D.C.
Payroll (Unemployment Insurance) taxes are paid by business on the behalf of their employees to fund unemployment insurance to the state. It consists of multiple factors. Below is an outline of the most common ones in D.C. –
- Wage Base – D.C.’s wage base is $9,000
- Employers – UI Contribution Tax is between 2.10% to 7.60%.
- New Employers – UI Contribution Tax is 2.70% for all new employers.
- UI Rates – range from 0.10% to 5.40%
D.C. Business Entities – LLCs
Vermont has an average cost of opening an LLC. Here are some important facts:
- The District’s LLC fee is bi-annual at $300.
- When you register with the state, you pay a one time fee of $200
- Secretary of the District of D.C. – click here