DC
District of Columbia Small Business Tax Guide
DC sales, franchise and income tax figures quoted from the Office of Tax and Revenue, with the date we checked them. An educational overview, not tax advice.
Disclaimer: This page is educational content only. Tax laws change, and your situation may differ. It is not legal, tax, or financial advice. Consult a qualified professional licensed in District of Columbia before making filing or planning decisions.
Tax landscape for small businesses
Every District of Columbia figure on this page is quoted from DC's Office of Tax and Revenue (OTR) and was checked on October 31, 2026; the OTR pages we quote show no publication date of their own. Rates and thresholds change, so confirm them with OTR or a tax professional before you file.
OTR's sales and use tax page (District of Columbia, checked October 31, 2026) says: "Sales and use tax is applied to the sale, lease, or rental of tangible personal property and certain services in the District of Columbia." The same page carries this notice: "The increase in the general sales tax rate to 7% has been postponed. The general sales tax rate remains 6% through September 30, 2027."
OTR's business tax rates page (District of Columbia, checked October 31, 2026) lists the corporate franchise tax rate for tax year "2025" as "8.25%", and the same "8.25%" for unincorporated businesses. The unincorporated business franchise tax applies to "Net income of unincorporated businesses on a combined reporting basis with gross receipts more than $12,000." Corporations, and unincorporated businesses that owe this tax, pay at least the minimum: "$250 minimum tax, if DC gross receipts are $1 million or less". Not every unincorporated business owes it. The same page says: "A business is exempt if more than 80% of gross income is derived from personal services rendered by the members of the entity and capital is not a material income-producing factor. A trade, business or professional organization that by law, customs or ethics cannot be incorporated is exempt."
Worked example, with sample figures: a DC shop sells $1,200.00 of goods taxed at the general rate quoted above from OTR (District of Columbia, checked October 31, 2026). Sales tax is $1,200.00 × 6% = $72.00, so the invoice comes to $1,272.00. Whether a particular item or service is taxable, and at which rate, is for OTR to confirm. Use your own figures; these are only an illustration.
Billed's invoice software page says: "Save your tax rates and settings once, and Billed calculates taxes automatically when you create invoices and estimates."
Tax overview
Each row lists a tax area and its notes. Confirm current figures with your state's tax agency or the IRS.
| Tax type | Rate or basis | Notes |
|---|---|---|
| Sales and use tax | "6% through September 30, 2027" | OTR (District of Columbia, checked October 31, 2026): "The general sales tax rate remains 6% through September 30, 2027." OTR also says: "The increase in the general sales tax rate to 7% has been postponed." |
| Corporate franchise tax | "8.25%" for tax year "2025" | OTR business tax rates (District of Columbia, checked October 31, 2026). Minimum tax: "$250 minimum tax, if DC gross receipts are $1 million or less" and "$1000 minimum tax, if DC gross receipts are more than $1 million". |
| Unincorporated business franchise tax | "8.25%" for tax year "2025" | OTR business tax rates (District of Columbia, checked October 31, 2026): "A 30% salary allowance for owners and a $5,000 exemption are deductible from net income to arrive at taxable income." |
| Individual income tax | From "4% of the taxable income" to "10.75%" on the top bracket | OTR income tax rates (District of Columbia, checked October 31, 2026), for "tax years beginning after 12/31/2021": "Not over $10,000" is taxed at "4% of the taxable income." and "Over $1,000,000" at "$91,525, plus 10.75% of the excess above $1,000,000." |
Filing requirements
This list isn't a complete checklist for your business.
Register with OTR (Form FR-500)
OTR's new business registration page (District of Columbia, checked October 31, 2026) says: "All new businesses seeking to register with the District of Columbia must have the following information available to complete the FR-500 New Business Registration." It sets out the order: "Register with DLCP if required, then complete the FR 500, then go back to DLCP to obtain your business license."
Remote sellers and marketplaces
OTR's sales and use tax FAQs (District of Columbia, checked October 31, 2026) say: "In the District, a remote seller whose gross revenue from sales is delivered into the District exceeds $100,000 or who has more than 200 separate retail sales delivered in the District in the previous calendar year or the current calendar year has economic nexus with the District and is responsible for obtaining a retail license, as well as remitting District sales and use tax." They add: "Remote sellers should register as a new business online using Form FR-500 and indicate that they are a remote seller when prompted." Under the same FAQs, sellers that deliver in DC through employees or independent contractors aren't remote sellers, and marketplace facilitators must collect DC sales tax for the sellers on their marketplaces (the FAQs give the start date as "April 1, 2019").
Estimated tax for individuals
OTR (District of Columbia, checked October 31, 2026) lists two conditions for quarterly DC estimated tax: "You live in DC and your gross income isn’t fully withheld" and "You expect your DC tax liability will be greater than $100.00." The deadlines it lists are "April 15", "June 15", "September 15" and "January 15".
Estimated franchise tax for businesses
OTR (District of Columbia, checked October 31, 2026): "Every corporation, financial institution, and unincorporated business required to file a DC tax return must pay estimated taxes if the tax liability for the year is more than $1,000.00." For calendar-year filers it lists "April 15", "June 15", "September 15" and "December 15".
Interest on underpaid estimates
OTR (District of Columbia, checked October 31, 2026): "OTR will automatically charge 10 percent interest, compounded daily, on any underpayment of estimated taxes."
Deductions and write-offs
Confirm with your state how it treats each item.
- Employer-equivalent deduction: In the US (federal), the IRS self-employment tax page (updated October 30, 2026) says: "You can deduct the employer-equivalent portion of your self-employment tax in figuring your adjusted gross income." Ask OTR or a tax professional how DC treats it.
- Proof for every deduction: In the US (federal), the IRS recordkeeping page (updated May 1, 2026) says: "You must be able to prove certain elements of expenses to deduct them."
- Health insurance: In the US (federal), the IRS self-employment tax page (updated October 30, 2026) says "a deduction, for income tax purposes, is allowed to self-employed individuals for the cost of health insurance."
Practical tips
- Show sales tax as its own line on each invoice, so the tax you collected is easy to total when the return is due.
- Recheck the general rate before each filing period: OTR (District of Columbia, checked October 31, 2026) says: "The increase in the general sales tax rate to 7% has been postponed." Its notice also gives the current rate an end date.
- Put every estimated-payment date in your calendar on the day you register, with a reminder a week before.
- Keep each receipt with the expense it belongs to, so deductions are easy to support if OTR or the IRS asks.
Frequently asked questions
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At a glance
| Topic | Official source | Date shown |
|---|---|---|
| Sales and use tax | DC Office of Tax and Revenue, sales and use tax page | Checked October 31, 2026 |
| Remote sellers and marketplaces | OTR, sales and use tax FAQs page | Checked October 31, 2026 |
| Franchise tax | OTR, business tax rates page | Checked October 31, 2026 |
| Individual income tax | OTR, individual and fiduciary income tax rates page | Checked October 31, 2026 |
| Estimated tax | OTR, underpayment of estimated tax interest page | Checked October 31, 2026 |
| Federal self-employment tax | IRS.gov | Updated October 30, 2026 |
When this isn't for you
Use OTR or a tax professional for filing decisions; this page is a starting point. Not covered here: DC business license fees, payroll and unemployment insurance, real property tax, or which goods and services are taxed at other rates; check those with the agency concerned before you file.