Tax Requirements in Washington DC
You must file a DC tax return if you lived in the District of Columbia for 183 days or more during the taxable year, regardless of your permanent residence. An LLC can help reduce taxes by allowing owners to deduct business expenses on personal returns.
Tax Rates in Washington DC
Income tax rates for 2016-2021 in DC are as follows:
- 4% on the first $10,000
- 6% on $10,001-$40,000
- 8.5% on $60,001-$350,000
- 8.95% on income over $350,000
Taxation in Washington DC
Residents of Washington DC pay federal income taxes, local DC income taxes, a 6% sales tax, and local property taxes. There is no state income tax, but local DC income taxes apply.
Payroll Taxes in DC
Employers in DC pay unemployment insurance tax and District income tax.
DC Transfer Taxes
Transfer taxes apply when buying or selling real estate in DC, also known as recordation, stamp, or grantee taxes.
Sales Tax in DC
The general sales tax rate in DC is 6%. Meals, rental cars, and alcohol are subject to a 10% supplementary sales tax.
Business Taxes in DC
DC corporations are subject to federal, state, and local taxes.
Tax Compliance for DC Businesses
Automating sales tax collection and payment is the most efficient way for DC businesses to manage compliance.
State and Local Tax Structure in Washington DC
Washington DC’s tax structure tends to be progressive, especially when federal taxes are considered.
Property Taxes in Washington DC
The effective property tax rate in DC is 1.083% of assessed home value, with an average annual property tax of $2,707 for a $250,000 home.
DC Resident Tax Obligations
DC residents must pay federal income taxes, local DC taxes, and property taxes. They do not pay state income taxes but file local DC income tax returns. Residents working in neighboring states may owe taxes there as well.