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District of Columbia Taxes


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 six (6) tax brackets. They range from 4.00% to 8.95%. The highest bracket of 8.95% 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 0.59%, 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 12% and 16%. The first $5,762,000 dollars of the estate is exempt from 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
  • 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

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