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District of Columbia Tax Rate Changes Effective October 1, 2021

Thursday, September 30, 2021

The District of Columbia Office of Tax and Revenue (OTR) reminds taxpayers, tax professionals, software providers, businesses and others about tax changes that were enacted in the Fiscal Year 2022 Budget Support Emergency Amendment Act of 2021.

These tax changes will take effect October 1, 2021, unless otherwise noted, for the following tax types:

Individual Income, Corporation Franchise and Unincorporated Business Taxes:

The following sources of income will be excluded from the computation of District gross income:

  • Unemployment insurance benefits provided by the District or any other state;
  • Grants awarded by the Mayor under the COVID-19 Hotel Recovery Grant Program Act of 2021;
  • The following grants awarded by Deputy Mayor for Planning and Economic Development:

(i) Grants awarded to Check It Enterprises under D.C Code § 1-328.04(h)(1)(A)
(i) Small business grants awarded under D.C Code § 1-328.04(l);
(ii) Grants to D.C. Center for LQBT Community awarded under D.C Code § 1-328.04(m);
(iii) Large company grants awarded under D.C Code § 1-328.04(n);
(iv) Local food access grants awarded under D.C Code § 1-328.04(o);
(v) Guaranteed income pilot program grants awarded under D.C Code § 1-328.04(p);
(vi) Grants awarded to Community Development Financial Institutions or Minority Depository Institutions awarded under D.C Code § 1-328.04(q);
(vii) Equity growth impact grants awarded under D.C Code § 1-328.04(r);
(viii) Great Streets program grants awarded under D.C Code § 1-328.04(s);
(ix) Bridge Fund recovery and special event support grants awarded under D.C Code § 1-328.04(t);
(x) Small and medium business recovery and growth program grants awarded under D.C Code § 1-328.04(u); and
(xi) Equity impact enterprise commercial property acquisition grants awarded under D.C Code § 1-328.04(v).

Individual Income Tax Rates:

Beginning on January 1, 2022, the individual income tax rates will be determined in accordance with the following table:

Not over $10,000 4% of the taxable income
Over $10,000 but not over $40,000 $400, plus 6% of the excess over $10,000
Over $40,000 but not over $60,000 $2,200, plus 6.5% of the excess over $40,000
Over $60,000 but not over $250,000 $3,500, plus 8.5% of the excess over $60,000
Over $250,000 but not over $500,000 $19,650, plus 9.25% of the excess over $250,000
Over $500,000 but not over $1,000,000 $42,775, plus 9.75% of the excess over $500,000
Over $1,000,000 $91,525, plus 10.75% of the excess over $1,000,000

Additional Changes Effective October 1 – Not Included in the Fiscal Year 2021 Budget Support Emergency Amendment Act of 2021:

Cigarettes and Other Tobacco Tax:

Cigarettes: The fixed tax remains $4.50 per package of 20 cigarettes. However, the surtax is increased from $.50 cents to $.51 cents per package of 20 cigarettes. As a result, the combined cigarette excise tax per package of 20 cigarettes is $5.01.

OTR will not administer a floor tax in connection with this increase in the cigarette tax, nor will the cigarette stamps currently in use be changed when the tax increases on October 1. Cigarette stamps purchased on or after October 1 will be sold at the new tax rate.

Other Tobacco: The tax rate on other tobacco products is decreased from 91 percent of wholesale sales of other tobacco products to 80 percent of wholesale sales of other tobacco products. Additionally, the rate for littler cigars remains at $.25 per little cigar.

Motor Fuel Tax:

The motor fuel surcharge is increased from $.053 to $.103 per gallon on the sale of gasoline, gasohol, and other motor vehicle fuel. This surcharge is in addition to the $.235 tax on the sale of gasoline, gasohol and other motor vehicle fuel.

For additional information, contact OTR’s Customer Service Center at (202) 727-4TAX (4829).