Key figures
District of Columbia payroll
2026, with sources
Residents only for income tax
DC withholds income tax only from DC residents, at rates from 4% to 10.75%. A DC employer with staff who live in Maryland or Virginia withholds those states’ taxes instead and registers with them. Withholding returns are filed quarterly on MyTax.DC.gov, on the last day of the month after each quarter, and W-2s for DC residents go to OTR by January 31.
Unemployment insurance and Paid Family Leave follow the work, not the residence: everyone working in DC is covered. UI is paid on the first $9,000 of wages; a new employer pays 2.7%, or the prior year’s average rate if higher, for four to five years until it can be experience-rated.
Paid Family Leave
DC’s Paid Family Leave is an employer-only payroll tax: 0.75% of covered employees’ wages in 2026, filed and paid each quarter by the last day of the following month. It cannot be deducted from pay. From October 1, 2026, the benefit structure changed: medical leave runs up to 10 weeks, family leave up to 6, parental leave stays at 12 and prenatal leave at 2, and the maximum weekly benefit is $1,100. Employers must post the updated notice each year.
An example: a DC startup with five employees earning $100,000 each pays $3,750 a year in Paid Family Leave tax (0.75% of $500,000) and $1,215 in unemployment tax at the 2.7% new-employer rate on $45,000 of taxable wages. None of it comes out of paychecks.
Wages and timing
DC’s wage-payment rules are stricter on timing than most neighbors’, and late final pay carries liquidated damages of 10% of the unpaid wages for each working day, capped at treble.
- Pay at least twice a month; executives, administrators and professionals at least monthly.
- Final pay: next working day after a discharge; on resignation, next payday or within 7 days.
- Minimum wage indexed every July 1; tipped wage 56% of it from July 1, 2026.
- New hires reported to the Child Support Services Division.
The federal baseline
This page covers what District of Columbia adds. The federal rules underneath it apply here too.
Common questions
Can we deduct DC Paid Family Leave from employees?
No. DC’s Paid Family Leave is funded entirely by employers, at 0.75% of each covered employee’s wages, paid quarterly with the wage report. It may not be deducted from a worker’s paycheck.
When is a final paycheck due in DC?
By the next working day after the discharge. When an employee resigns, final wages are due on the next regular payday or within seven days, whichever is earlier. Late payment carries liquidated damages of 10% of the unpaid wages per working day, up to treble the amount.
What is DC’s minimum wage?
$18.40 an hour from July 1, 2026, up from $17.95, for all employers regardless of size; the tipped base wage is $10.30. DC raises its minimum wage every July 1 in line with the Washington-area consumer price index, and DOES publishes the new rate in advance. The tipped minimum wage is moving to a percentage of the full minimum: 56% from July 1, 2026, then 60% in 2028 and up to 75% by 2034.
Payroll next door
- MDMaryland payrollMaryland payroll withholds state and county income tax, pays unemployment on the first $8,500, and adds FAMLI contributions of 0.9% from January 1, 2027. Montgomery and Howard counties set their own minimum wages.
- VAVirginia payrollVirginia payroll withholds up to 5.75%, pays unemployment on the first $8,000, and follows a minimum wage of $12.77 in 2026 that rises to $15.00 by 2028. Paid family leave contributions start April 1, 2028.
How District of Columbia compares
- No tax on wagesStates with no state income tax on wagesDistrict of Columbia: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programDistrict of Columbia: state paid leave or disability program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesDistrict of Columbia: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the District of Columbia guide
- AccountingAccounting and state tax in District of ColumbiaCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in District of ColumbiaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in District of ColumbiaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in District of ColumbiaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in District of ColumbiaCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- DC Office of Tax and Revenue — Other Business Taxes FAQs (employer withholding)
- DC Department of Employment Services — Tax Rate Questions
- DC Paid Family Leave — PFL Tax Rate Change FAQ
- DC Paid Family Leave — 2026 Program Changes
- DOES — District of Columbia Minimum Wage Increase (July 1, 2026)
- DC Code § 32-1302 — When wages must be paid
- DC Code § 32-1303 — Payment of wages upon discharge or resignation
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.