DC payroll tax requirements for employers cover three obligations: withholding District income tax from resident employees’ wages, paying unemployment insurance contributions on the first $9,000 of each employee’s annual wages, and paying the Universal Paid Leave tax, which rose to 0.75% of covered wages for 2026 from 0.62% in prior years.1DOES Office of Paid Family Leave. PFL Tax Rate Change FAQ and Preparation Guidance Late unemployment and paid leave contributions accrue interest at 1.5% per month, so miscalculated rates get expensive quickly.
Income Tax Withholding
Every employer paying wages to a DC resident must withhold District income tax from each paycheck.2D.C. Law Library. District of Columbia Code 47-1812.08 – Withholding of Tax New hires who live in the District complete Form D-4 to set their filing status and allowances, and you calculate withholding using the percentage-method or wage-bracket tables issued by the Office of Tax and Revenue.3District of Columbia Office of Tax and Revenue. Withholding Tax Forms
DC’s individual income tax is progressive, running from 4% on the first $10,000 of taxable income to 10.75% on income over $1,000,000.4District of Columbia Office of Tax and Revenue. DC Individual and Fiduciary Income Tax Rates DC does not publish a separate flat rate for supplemental wages like bonuses or commissions, so the standard tables apply to those payments too.
Maryland and Virginia Commuters
Workers who commute in from Maryland or Virginia are generally exempt from DC withholding under reciprocity agreements, but only if they file Form D-4A with you to certify non-resident status.5Government of the District of Columbia. Form D-4A Certificate of Nonresidence in the District of Columbia Without a D-4A on file, you must withhold DC tax as though the worker were a resident. Keep those certificates in your records; an audit that finds them missing can leave you liable for the tax that should have been withheld.
Unemployment Insurance
DC unemployment insurance is funded entirely by employers. Any business with one or more employees contributes to the Unemployment Compensation Fund, and the tax applies only to the first $9,000 in wages paid to each employee during the calendar year — the taxable wage base for 2026.6D.C. Law Library. District of Columbia Code 51-103 – Employer Contributions Once an employee’s year-to-date earnings pass that ceiling, you owe no further unemployment tax on their wages that year.
New employers start at 2.7%. After enough history in the system, the District assigns an experience rating that reflects how many former employees have claimed benefits against your account. Fewer claims earn a lower rate; frequent layoffs push it higher. The Department of Employment Services sends annual rate notices, and applying the wrong rate on your quarterly returns creates an underpayment that compounds fast.
Late contributions carry mandatory interest at 1.5% per month on the unpaid balance, starting from the original due date.7D.C. Law Library. District of Columbia Code 51-104 – Payment of Employer Contributions Persistent delinquency can lead to liens on business assets, and willful evasion is treated as a criminal matter.
Universal Paid Leave
The largest payroll-cost change for 2026 is the Universal Paid Leave Act contribution. The employer rate is now 0.75% of each covered employee’s total wages, up from 0.62%.1DOES Office of Paid Family Leave. PFL Tax Rate Change FAQ and Preparation Guidance This is an employer-paid obligation that funds the District’s paid time off program for parental leave, care of a sick family member, and an employee’s own serious medical condition.
A covered employee is anyone who spends more than half of their work time in the District. The tax applies to their full wages with no cap, unlike unemployment insurance. Nearly all private-sector employers are covered, including nonprofits and households that employ domestic workers.
Quarterly due dates for 2026:
- Q1 (January–March): April 30, 2026
- Q2 (April–June): July 31, 2026
- Q3 (July–September): October 31, 2026
- Q4 (October–December): January 31, 2027
Late payments carry the same 1.5% monthly interest that applies to unemployment insurance.8D.C. Law Library. District of Columbia Code 32-541.03(Perm) – Contributions to the Universal Paid Leave Fund
Self-Employed Opt-In
Sole proprietors, independent contractors, and partners who perform more than half of their work in DC can voluntarily enroll in the paid leave program at the same 0.75% rate on gross self-employment income.9DOES Office of Paid Family Leave. Self-Employed Enrollment windows open every November and December, or within 60 days of becoming newly self-employed in the District. If you skip the first window you are eligible for, you cannot receive benefits during your first year, and once enrolled you must stay in for at least three years.
Registering With the District
Before you can withhold or remit, register with the Office of Tax and Revenue using Form FR-500, the combined business tax registration application.10Office of the Chief Financial Officer. Combined Registration Application for Business DC Taxes Fees Assessments The form asks for your Federal Employer Identification Number, business structure, start date, and the date you first paid wages in the District. Owners disclose Social Security numbers as responsible parties, and you supply a NAICS code that the District uses for unemployment experience rating.
Once FR-500 is processed, OTR issues separate identification numbers for income tax withholding and unemployment insurance. Paid leave contributions are reported through the Department of Employment Services employer portal, not through OTR.
Filing and Paying
DC withholding returns are filed either quarterly on Form FR-900Q or annually on Form FR-900A, depending on how OTR classifies your account. All withholding returns must be filed electronically through MyTax.DC.gov; paper filing is no longer accepted.11District of Columbia Office of Tax and Revenue. 2024 FR-900A Instructions
Quarterly withholding returns and unemployment wage reports run on the same rhythm: due by the last day of the month following the end of each calendar quarter.12District of Columbia Department of Employment Services. DOES Employer Self Service Portal Annual withholding filers deposit by January 20 for the preceding calendar year. You must file even if no tax was withheld during the period, unless you have already submitted a final return closing the account.
MyTax.DC.gov handles both filing and payment; you enter gross wages and withholding amounts, and the system calculates your liability. Pay by electronic funds transfer from a business bank account, and keep the portal’s confirmation receipts as proof of timely filing.
Year-End Reporting
Quarterly and monthly withholding filers file an annual reconciliation, Form FR-900B, by January 31 following the tax year. Every W-2 showing DC income tax withheld goes in with the FR-900B.13Government of the District of Columbia. FR-900Q Booklet Employers with 25 or more W-2 or 1099 forms must file them electronically through MyTax.DC.gov. Smaller filers can enter forms manually online or send paper copies with a transmittal.
If you paid $600 or more to an independent contractor who is a DC resident, file Form 1099-NEC directly with OTR by January 31. Participation in the IRS Combined Federal/State Filing program does not satisfy the DC requirement; the District needs its own copy. Bulk filers use the IRS Publication 1220 record format; those with fewer than 25 forms can use the manual entry option on MyTax.DC.gov.
Missing the January 31 deadline for W-2s or 1099s is one of the most common compliance failures for DC employers, and the penalties for late annual filings and late W-2 transmittals are separate from the quarterly interest charges.