Overview of Sales Tax in Washington, D.C.
The Washington, DC sales tax rate is 6%, effective October 1, 2013. This single, district-wide general sales tax rate applies to tangible personal property and selected services. DC has other sales tax rates too: 10% for liquor sold for off-premise and on-premise consumption, restaurant meals and rental vehicles, 18% for parking in commercial lots, and 14.5% for hotels.
Taxable Goods and Tax-Exempt Items
Goods subject to sales tax in DC include furniture, home appliances, and motor vehicles. Groceries, prescription medicine, and gasoline are tax-exempt.
Sales Tax Collection and Filing Requirements
Vendors with over $100,000 of gross DC receipts or over 200 separate DC retail sales must collect DC sales tax, even on Internet sales delivered into DC. Sales to purchasers with valid DC sales tax exemption certificates do count when determining if the thresholds are met.
Income Tax and Tax Rates
Income tax rates in DC range from 4.0% to 10.75%, and there is a 6% sales tax. If you make $100,000 a year living in DC, you will be taxed $29,318. Your net pay will be $70,682 per year, or $5,890 per month.
Understanding Sales and Use Tax
Sales tax is calculated by multiplying the purchase price by the applicable tax rate. The seller collects it at the time of the sale. Use tax is self-assessed by a buyer who has not paid sales tax on a taxable purchase.
Requirements for Businesses to Collect Sales Tax in DC
You’ll need to collect sales tax in Washington, D.C. if you have nexus there. Physical nexus means having enough tangible presence or activity in a state to merit paying sales tax in that state. Economic nexus means passing a states’ economic threshold for total revenue or the number of transactions in that state.
Payment of DC Business Tax
The DC Office of Tax and Revenue is responsible for collecting business taxes. Businesses can pay their taxes online, by mail, or in person. Online payments can be made through the OTR website or through a third-party provider. To pay by mail, businesses can send a check or money order to the OTR.