Payroll Taxes in Washington, DC
In Washington, DC, the Office of Tax and Revenue administers payroll taxes.
- DC has two types of payroll taxes: Unemployment insurance tax and a District income tax.
- Employers must pay a state unemployment insurance tax to support unemployed people, with no minimum wage amount required before paying this tax.
Income and Property Taxes in DC
- Federal agencies must withhold income taxes from wages of employees who are DC residents if their regular workplace is in DC.
- The real property tax is the main source of DC general fund receipts, and DC no longer levies an inheritance tax.
Tax Rates in the District of Columbia
- DC has a 6% sales tax rate and ranks 48th on the 2023 State Business Tax Climate Index.
- Local income tax rates range from 4 to 10.75 percent, and the sales tax rate is 6 percent.
Taxes DC Employees Pay
- Employers in DC must pay a state unemployment insurance tax (SUI) in addition to the Federal Unemployment Tax Act (FUTA) to support unemployed individuals.
- New employers pay a standard tax rate of 2.7% on the first $9,000 of wages paid to each worker.
Taxation of Residency and DC Employees
- DC employers must withhold DC income taxes on wages paid to DC residents who work in DC.
- Nonresidents working in DC are not subject to withholding.
Taxes Deducted from DC Paychecks
- The District of Columbia income tax rate ranges from 4% to 10.75%.
- Social security and Medicare taxes are deducted based on a percentage of an employee’s earnings, with a wage base limit for social security tax.