Withholding Taxes: District of Columbia

Federal law and guidance on this subject should be reviewed together with this section.

Authors: Stuart R. Buttrick and Tareen Zafrullah, Faegre Drinker Biddle & Reath LLP

Summary

• District of Columbia (DC) employers must withhold DC income taxes on wage payments made to DC residents who work in DC. An employee is a DC resident for income tax purposes if certain criteria are met. Nonresidents who work in DC are not subject to withholding. See Withholding on Residents, Nonresidents and Expatriates.
• DC has reciprocal agreements with Virginia and Maryland regarding state income taxes. Virginia or Maryland residents who work in DC have taxes withheld for their home states only. See Withholding on Residents, Nonresidents and Expatriates.
• DC employers determine income tax withholding for residents by using Form D-4, District of Columbia Employee Withholding Allowance Certificate. See Employee's Withholding Allowance Certificate.
• The withholding rate on supplemental wage payments, such as bonuses, is calculated differently depending on when the supplemental wage payments are made. See Supplemental Wages.
• Each year, employers must provide copies of federal Form W-2, Wage and Tax Statement, to each resident from whom any amount of DC income tax was withheld, or would have been withheld under the approved tables and other methods if the employee had claimed no more than one withholding allowance. See Form D-2 Reporting Requirements.