Washington DC Business Taxes for LLCs
Learn what business taxes your Washington DC LLC needs to pay — including the Unincorporated Business Franchise Tax, sales tax, payroll tax, and federal income tax. Rates, forms, and filing thresholds explained.
Bizee Editorial Staff
Editorial Team
DC tax quick facts
Filing fee: $99 (LLC Articles of Organization)
Processing time: 3 Weeks
State agency: DC Department of Licensing and Consumer Protection, Corporations Division
Annual report due: Biennial report due April 1 every 2 years; $300 filing fee
State tax rate: Unincorporated Business Franchise Tax: 8.25% on net income (minimum $250 if DC gross receipts ≤ $1M); Corporate Franchise Tax: 8.25% flat rate; Sales tax: 6.0% general rate (increasing to 7.0% October 1, 2026)
How DC taxes your LLC
Washington DC LLCs face several layers of tax: a District franchise tax on business income, sales tax on taxable sales, payroll taxes if you have employees, and federal income tax on your personal share of profits. Which DC franchise tax applies depends on how your LLC is classified for federal tax purposes.
Most single-member and multi-member LLCs are treated as pass-through entities by default, which means DC taxes them under the Unincorporated Business Franchise Tax rather than the Corporate Franchise Tax. If your LLC has elected S Corp or C Corp status with the IRS, the Corporate Franchise Tax applies instead. DC does not have a separate personal income tax on pass-through LLC income the way some states do — the franchise tax is the primary DC-level business tax for most LLCs.
Unincorporated Business Franchise Tax
If your LLC is taxed as a sole proprietorship or partnership — the default for most LLCs — DC requires you to file Form D-30, the Unincorporated Business Franchise Tax Return, when your DC gross income from District sources exceeds $12,000 in a tax year. The tax rate is 8.25% on net income, with a minimum tax of $250 for businesses with DC gross receipts of $1 million or less.
One thing that catches DC LLC owners off guard: you need to file Form D-30 even if your LLC had no net income for the year, as long as DC gross income crossed the $12,000 threshold. The minimum $250 tax is still owed. A tax professional can help you figure out whether your specific income sources count as DC-source income for this purpose.
Corporate Franchise Tax (S Corp or C Corp election)
If your LLC has elected to be taxed as a corporation, DC applies the Corporate Franchise Tax at a flat rate of 8.25% on taxable net income. You file on Form D-20. The minimum tax is $250 for businesses with DC gross receipts of $1 million or less, and $1,000 for businesses with DC gross receipts above $1 million.
The 8.25% rate applies to both the Unincorporated Business Franchise Tax and the Corporate Franchise Tax — the difference is the form you file and how taxable income is calculated. Talk to a tax professional before electing corporate status to understand how the DC minimum tax interacts with your expected income.
DC sales and use tax
DC's general sales and use tax rate is 6.0% on most tangible personal property and many taxable services. That rate is scheduled to increase to 7.0% beginning October 1, 2026. If your LLC sells taxable goods or services in DC, you need to collect and remit this tax to the DC Office of Tax and Revenue.
Some categories carry higher rates: food and beverages for immediate consumption are taxed at 10%, hotel and lodging at a combined rate of 15.95%, and motor vehicle sales or rentals at 10.25%. If your LLC operates in any of these categories, the standard 6.0% rate does not apply.
Payroll and unemployment taxes
If your LLC has employees working in DC, you need to withhold DC income tax from wages paid to DC residents and remit it to the DC Office of Tax and Revenue. You also need to register with the DC Department of Employment Services (DOES) and pay DC unemployment insurance (UI) tax before or when you start paying taxable wages.
Plus, most employers — including LLCs — also owe Federal Unemployment Tax Act (FUTA) tax if they pay wages of at least $1,500 in any calendar quarter or have at least 1 employee on any day in 20 different weeks during the year. A payroll professional can help you figure out your combined DC and federal withholding obligations.
Federal income tax
On top of DC-level taxes, you owe federal income tax on your share of LLC profits. For a single-member LLC, profits flow to your personal Form 1040 and are subject to self-employment tax. For a multi-member LLC, each member reports their share on Schedule E. If your LLC is taxed as an S Corp or C Corp, different federal rules apply.
In most cases, you'll also need to make quarterly estimated tax payments to both the IRS and DC rather than paying everything at year-end. Getting behind on estimated payments can mean interest and penalties on top of the tax owed. A tax professional can help you set up a payment schedule that fits your income pattern.
Biennial report and recurring fees
DC LLCs don't file an annual report — they file a biennial report every 2 years to stay in good standing with the Department of Licensing and Consumer Protection. The report is due by April 1 of the year following formation, and then on April 1 every 2 years after that. The filing fee is $300 for both domestic and foreign LLCs.
You can file online through the DC CorpOnline Web Portal or by mailing Form BRA-25 to the Corporations Division. Missing the April 1 deadline can put your LLC out of good standing, which affects your ability to do business in DC. Mark the date and treat the $300 fee as a fixed cost of keeping your LLC active.
Frequently asked questions
Yes. DC's general sales tax rate is 6.0% on most tangible personal property and many taxable services. That rate is scheduled to increase to 7.0% on October 1, 2026. Some categories carry higher rates — food and beverages for immediate consumption are taxed at 10%, and hotel lodging at a combined rate of 15.95%.
Yes. DC levies a personal income tax on DC residents at graduated rates between 4% and 10.75% depending on income level. For most LLCs taxed as pass-through entities, profits flow to the owner's personal return and are subject to this tax. The DC Unincorporated Business Franchise Tax is a separate obligation at the business level.
Yes. DC imposes a franchise tax on most LLCs. Pass-through LLCs file Form D-30 and pay the Unincorporated Business Franchise Tax at 8.25% on net income, with a $250 minimum tax when DC gross receipts are $1 million or less. LLCs taxed as corporations file Form D-20 and pay the Corporate Franchise Tax at the same 8.25% rate.
Yes. In most cases, you need to make quarterly estimated tax payments to both the IRS and the DC Office of Tax and Revenue. If you wait until the annual filing deadline to pay, you can owe interest and penalties on top of the tax itself. A tax professional can help you figure out the right payment amounts based on your projected income.
DC LLCs don't file annually — they file a biennial report every 2 years. The filing fee is $300 for both domestic and foreign LLCs. The report is due by April 1 of the year following formation, and then on April 1 every 2 years after that. Missing the deadline can put your LLC out of good standing with the District.
A DC LLC taxed as a pass-through entity needs to file Form D-30 when its gross income from DC sources exceeds $12,000 in a tax year. The filing requirement applies even if the LLC had no net income for the year — the $250 minimum tax is still owed once the $12,000 gross income threshold is crossed.
If your LLC has employees in DC, you need to withhold DC income tax from wages paid to DC residents and remit it to the DC Office of Tax and Revenue. You also need to register with the DC Department of Employment Services and pay DC unemployment insurance tax. Federal payroll taxes — Social Security, Medicare, and FUTA — apply on top of DC obligations.
