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District of ColumbiaB26-0457Council Period 26 (2025-2026)HouseWALLET

D.C. Income and Franchise Tax Conformity and Revision Emergency Amendment Act of 2025

Sponsored By: Phil Mendelson (Democratic)

Became Law

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Bill Overview

Analyzed Economic Effects

8 provisions identified: 4 benefits, 1 costs, 3 mixed.

New child care tax credit

Beginning January 1, 2026, you get a D.C. credit equal to 24.25% of your federal child and dependent care credit. You must qualify for the federal credit. This nonrefundable credit applies against your D.C. income tax. It helps with work‑related care costs for children or adult dependents.

Refundable $1,000 child credit for families

For tax years beginning January 1, 2026, D.C. provides a refundable $1,000 credit per qualifying child. The credit falls by $50 for each $1,000 (or part) your AGI is over: $55,000 (single or head of household), $70,000 (joint/combined), or $35,000 (married filing separately). You must claim the child on both federal and D.C. returns and have been a D.C. resident for the entire prior calendar year. The per‑child amount is indexed after 2026. The law repeals earlier 2025 child credit acts and replaces them with this program.

Teachers can deduct more classroom costs

Starting January 1, 2025, D.C. classroom teachers can deduct up to $500 for supplies and up to $1,500 for tuition and fees. You must have taught the whole year (or the whole prior year) in a D.C. public or approved charter school. You cannot also claim these same expenses in your federal adjusted gross income for that year. The maximum total deduction is $2,000.

Faster depreciation and shared-equity deduction

Beginning January 1, 2025, D.C. includes a federal special depreciation allowance in its tax rules. Investors in shared‑equity financing can also claim a D.C. depreciation deduction under the new section. These faster write‑offs can lower D.C. taxable income for businesses and qualifying investors.

Full SALT deduction, new high-earner cuts

Starting January 1, 2025, you can deduct state and local taxes on your D.C. return without the federal limit. If your D.C. adjusted gross income is over $200,000 ($100,000 if married filing separately), your itemized deductions are cut by 5% of the excess. Estates and trusts are not subject to this cut. Some deductions stay banned, including D.C. income or franchise taxes, certain pass‑through and business deductions, qualified tips and overtime, personal car loan interest, and a prior senior add‑on. If spouses or domestic partners file separate D.C. returns and one itemizes, both must itemize. Estates and trusts follow the new fiduciary/itemized rules, and a related estates-and-trusts paragraph is repealed.

Higher standard deduction replaces exemptions

Beginning January 1, 2025, D.C. sets a new basic standard deduction: $15,000 (single or separate), $22,500 (head of household), and $30,000 (joint). These amounts are indexed after 2025 and rounded down to the next $50. The D.C. standard deduction equals the basic amount plus any extra amount for age or blindness allowed under federal law. The law repeals D.C. personal exemptions. You must file a D.C. return if your gross income is at least your basic standard deduction.

Tighter breaks for Opportunity Fund investors

For investments in Qualified Opportunity Funds after December 31, 2026, D.C. capital gains benefits apply only if the fund meets new legal standards. If the fund qualifies, you can still seek the usual 5‑year basis boost and 10‑year gain exclusion. If it does not, you lose D.C. tax benefits for those gains.

CFO sets withholding; more worker options

Effective January 1, 2025, the Chief Financial Officer runs D.C. withholding rules and rate references. Withholding uses the highest applicable D.C. tax rate on the base instead of a flat 5%. For pay periods after December 31, 2017, you may claim extra withholding exemptions equal to your estimated itemized deductions divided by a CFO‑set number. A related percentage in a withholding rule increases from 85% to 100% in 2025. These changes can raise or lower paycheck withholding and let you better match it to your deductions.

Sponsors & Cosponsors

Sponsor

  • Phil Mendelson

    Democratic • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 34 • No: 15

House vote • 11/4/2025

Other

Yes: 11 • No: 1 • Other: 1

House vote • 11/4/2025

Other

Yes: 3 • No: 10

House vote • 11/4/2025

Other

Yes: 7 • No: 4 • Other: 2

House vote • 11/4/2025

Final Reading

Yes: 13 • No: 0

Actions Timeline

  1. Act A26-0214 Published in DC Register Vol 72 and Page 013684, Expires on Mar 03, 2026

    12/5/2025House

  2. Enacted without Mayor's Signature with Act Number A26-0214, Expires on Mar 03, 2026

    12/3/2025House

  3. Returned from Mayor

    12/2/2025House

  4. Transmitted to Mayor, Response Due on Dec 02, 2025

    11/17/2025House

  5. Legislative Meeting

    11/4/2025House

  6. Retained by the Council

    11/4/2025House

  7. B26-0457 Introduced by Chairman Mendelson at Office of the Secretary

    11/3/2025House

Bill Text

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