Monday, September 9, 2024
The District of Columbia Office of Tax and Revenue (OTR) reminds taxpayers, tax professionals, software providers, businesses and others about tax changes that will take effect October 1, 2024. These changes are pursuant to the Fiscal Year 2025 Budget Support Emergency Amendment Act of 2024 (Act 25-0506), and the Fiscal Year 2025 Budget Support Amendment Act of 2024 (Act 25-0550).
The following changes will take effect October 1, 2024, unless otherwise indicated:
Clean Hands:
Corporation Franchise Tax and Unincorporated Business Franchise Tax:
Individual Income Tax:
– For tax years beginning after December 31, 2023, if the amount of the DC Earned Income Tax Credit is $1,200 or more, a taxpayer may elect to receive the credit in 12 equal monthly payments. If the taxpayer does not make such an election, the credit will be paid in one total payment.
– The DC Earned Income Tax Credit will increase to 85% of the federal credit for tax years beginning after December 31, 2024, to December 31, 2028. The increase to 100% of the federal credit, for tax years beginning after December 31, 2025, has been postponed to tax years beginning after December 31, 2028.
– The District established a new refundable income tax credit for tax years beginning after December 31, 2024.
– The amount of the credit will be $420 for each qualifying child who has not reached the age of 6 years as of December 31 of the taxable year, up to a maximum of three qualifying children. The amount of the credit will be reduced by $20 for each $1,000 (or fraction thereof) by which the taxpayer’s adjusted gross income exceeds a certain threshold amount.
– The threshold amounts are $160,000 for an unmarried individual filing as single, head of household or qualifying widow(er), $240,000 in the case of married individuals or registered domestic partners filing either jointly or separately on the same return, or $120,000 for an individual filing as married filing separately. (The income threshold amounts will be increased annually pursuant to the cost-of-living adjustment beginning in tax year 2025.)
Shared Responsibility Payment:
Sales and Use Tax:
Sports Wagering Tax:
Real Property Tax:
| Class 1A | Entire taxable assessed value | 0.85% |
| Class 1B | For the first $2,500,000 of taxable assessed value | 0.85% |
| For the remainder of the taxable assessed value above $2,500,000 | 1.00% |
Recordation Tax:
Additional Changes Effective October 1, 2024:
Cigarettes and Other Tobacco Tax:
Motor Fuel Tax:
Additional Changes Effective January 1, 2025
Estate Tax:
For additional information, contact OTR’s Customer Service Center at (202) 727-4TAX (4829).
Additional Resources:
So many parts of our daily lives moved online during the COVID-19 pandemic: school, work, shopping, and even important legal and tax documents.
In 2020 we issued OTR Notice 2020-08, which encouraged taxpayers and tax professionals to use our online portal, MyTax.DC.gov, to file and pay electronically whenever possible. It also allowed for electronic signatures on forms that couldn’t be filed electronically, making it easy for our community to handle their tax obligations in that difficult time.
Since the District’s declared public health emergency has been lifted, do you know the status of OTR’s electronic signature policy?
Current OTR Policy
For OTR records that are required to be in writing, an electronic signature will generally be accepted, unless a handwritten or “wet ink” signature is specifically required by law.
This means that most documents can be signed electronically, but you’ll need to check with our Customer Service team in advance to make sure.
You can contact the Customer Service Administration at:
(202) 727-4829
Mon–Fri, 8:15am – 5:30pm (except public holidays)
Background on the Policy
The current OTR policy on electronic signatures has been in place since 2001, when the District of Columbia adopted the Uniform Electronic Transactions Act (UETA).
This means that OTR was ahead of the curve, working to make it easier for everyone to manage their DC taxes!
For those looking for more detail, the law is codified at D.C. Code § 28-4901 et seq. Any additional questions can be directed to Customer Service at the number above.
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Operating a business in the District of Columbia requires adherence to the District’s tax and revenue regulations, including obtaining a Certificate of Clean Hands. This certificate is essential for obtaining a business license, grants, contracts, or other goods and services from the District of Columbia. It serves as proof of your compliance with the District’s financial obligations.
How to Obtain Your Certificate of Clean Hands
The process to verify your Clean Hands status and obtain your certificate remains straightforward and can be completed online at MyTax.DC.gov. Here’s how you can easily obtain your Certificate of Clean Hands in just three simple steps. Visit MyTax.DC.gov: Log in or create an account if you don’t have one.
For non-DC residents, the process is equally simple:
Checklist for Businesses Operating in the District
To ensure your business is in compliance, here are some key points to check:
Remember, all businesses are required to file Personal Property Tax returns unless they are exempt entities (this only applies to businesses located in the District).
What’s New: Reason Codes for Denials
We are excited to announce significant improvements to the process of obtaining a Certificate of Clean Hands. To enhance transparency and assist businesses in addressing any issues, reason codes will now be added to any denials. This means that if a denial is generated, customers will receive specific information about why the denial occurred and who they can contact to remediate any problems. This update is aimed at making the process more user-friendly and helping businesses quickly resolve any compliance issues.
Now when a taxpayer submits an online request for a Certificate of Clean Hands, they will either receive their certificate instantly or—if they are non-compliant—they will receive a clear explanation for a denial. Note that the non-compliance reasons will only display in the online system and will not print out on the notice that is generated to print.
For more details on how to get your Clean Hands Certificate and ensure your business is in full compliance, visit MyTax.DC.gov . It’s easier, faster, and safer to manage your tax obligations online.
Want More Information?
On February 28, Deputy Chief Financial Officer of the DC Office of Tax and Revenue Keith J. Richardson convened the inaugural meeting of the newly formed OTR Tax Advisory Board. This meeting allowed for introductions and lively discussions between board members and our senior staff. It also gave us all the opportunity to start outlining the direction that board meetings will take going forward.
The OTR Tax Advisory Board is part of our agency’s ongoing effort to enhance our public communication and improve our tax administration. This important initiative provides a new forum for our agency to communicate with a broad cross section of tax professionals representing a variety of taxpayers across our community. It is also a venue for us to hear from board members about how we can better serve District taxpayers.
A total of 20 professionals were invited to join the initiative, all of whom brought a great deal of enthusiasm to this initial meeting. Board members come from community tax organizations and nonprofits, tax law firms, academia, and accounting firms, and are excited to provide their expert guidance on ways we can improve our policies and procedures.
The OTR Tax Advisory Board is just one of the ways our agency is working to connect with our community and make it easier for them to manage and understand their taxes. We are dedicated to learning from this dialogue, and look forward to continued discussions with our board members.
For businesses and individuals in the District of Columbia, understanding the DC Personal Property Tax is crucial for compliance and financial planning. This guide aims to demystify the key aspects of this tax, providing answers to some of the most common questions.
The DC Personal Property Tax is a tax levied by the District of Columbia on the possession and use of personal property within its jurisdiction, but does not include real property (land and buildings) or inventory that is sold to customers. Personal property refers to movable assets owned by businesses, such as equipment, furniture, and machinery used in the business.
Generally, every individual, corporation, partnership, executor, administrator, guardian, receiver, trustee, or other taxpayer that owns or holds personal property for a trade or business must file a personal property tax return unless they are exempt from filing.
If the current value of the total personal property reported is $225,000 or less, no tax will be due. However, a return must still be filed even if there is no tax due.
The DC Personal Property Tax return is due annually on July 31st. If July 31st falls on a weekend or a public holiday, the due date is extended to the next business day. The filing deadline is critical for all businesses operating within the District that own taxable personal property. Filing the return on time helps avoid penalties and interest that can accrue on late submissions.
Note that the return is due on July 31st of the tax year being reported. So, for tax year 2024, the return is due on July 31, 2024.
For DC Personal Property Tax, personal property includes all movable assets that are used in conducting business. This includes, but is not limited to:
It’s important to note that inventory held for sale to customers in the ordinary course of business is generally exempt from personal property tax in the District. However, tangible personal property that is leased is included.
Yes, even if your business’s personal property is valued below the $225,000 threshold, you are still required to file a DC Personal Property Tax return. The District of Columbia uses these filings to assess and update its records on the personal property owned by businesses operating within its borders. Filing is mandatory, regardless of whether tax is owed on the property.
Failing to file a DC Personal Property Tax return when a balance is due can result in penalties and interest charges and/or an audit. In an audit, the District may estimate the value of your personal property and assess taxes based on this estimation. This could potentially lead to a higher tax liability than if an accurate return had been filed. Furthermore, continuous noncompliance can lead to more severe legal and financial consequences, impacting your business operations in the District.
Even if no tax is due, failing to file a Personal Property Tax Return is considered tax noncompliance and will result in a business being ineligible for a Certificate of Clean Hands.
You can file a Personal Property Tax return (Form FP-31) by logging on to your MyTax.DC.gov account. Filing electronically is free and secure.
Written by:
Elena Aceves Fowlkes
Assistant Director of Operations
DC Office of Tax and Revenue
Vacant properties—properties that are not actively generating income or serving as primary residences—are a common sight in urban areas. Whether they’re awaiting redevelopment, stuck in legal disputes, or simply neglected, these vacant properties have specific tax implications that property owners and investors must understand.
The Tax Classification Process
In Washington DC, the tax classification of a property plays a pivotal role in determining the amount of tax an owner must pay. Properties are categorized into different groups, each with its own tax rate(s). Vacant properties are defined by statute and must be registered with the Department of Buildings (DOB), which is responsible for the inspection and registration of vacant properties. In addition, DOB may issue exemptions in certain circumstances. Once a property has been registered with DOB, the department will transmit information regarding the property classification to the DC Office of Tax and Revenue (OTR) for the correct tax rate to be applied.
Class 3 Tax Classification
By law, vacant properties are considered threats to health and safety. For vacant properties, the key tax classification to be aware of is the “Class 3” classification. Class 3 is the tax classification that is assigned to vacant properties in the District of Columbia, and it applies to properties that are unoccupied and meet the vacant property conditions defined in District law.
The consequences of a vacant tax classification include a significantly higher real property tax rate.
| Class | Tax Rate per $100 | Description |
| 1 | $0.85 | Residential real property, including multifamily |
| 2 | $1.65 | Commercial and industrial real property, including hotels and motels, if assessed value is not greater than $5 million |
| 2 | $1.77 | Commercial and industrial real property, including hotels and motels, if assessed value is greater than $5 million but not greater than $10 million |
| 2 | $1.89 | Commercial and industrial real property, including hotels and motels, if assessed value is greater than $10 million |
| 3 | $5.00 | Vacant real property |
| 4 | $10.00 | Blighted real property |
Resolving Tax Classification Issues
If a property that was designated as vacant becomes legally occupied, the classification can be updated by DOB once the owner provides DOB the required information. DOB sends updates to the Office of Tax and Revenue daily, and OTR updates its tax database within 48 hours once it receives the information from DOB. DOB has multiple online tools that allow owners to register vacant buildings, verify that buildings are occupied, report a vacant property, or request exemptions for vacant properties. Owners with questions about their vacant or blighted tax classification rates should first contact DOB to address any issues and allow DOB to review and request a classification change to OTR. Owners can always verify their tax classification by viewing their real property tax assessment on MyTax.DC.gov, where their Tax Class is listed.
