DC unincorporated business and corporate franchise taxes

DC imposes its unincorporated business franchise tax on sole proprietorships, partnerships, LLCs taxed as partnerships or disregarded entities, and other unincorporated businesses with DC income. The rate is 8.25%, and the minimum tax is $250 if DC gross receipts are $1 million or less, or $1,000 above $1 million.

Two situations mean no D-30 is due:

• Gross income of $12,000 or less. Form D-30N is available to show the business has no filing obligation.
• Personal service businesses. More than 80% of gross income comes from personal services actually performed by the owners, and capital is not a material income-producing factor.

Many consultants and professional firms fall into the personal services exemption, but businesses that rely on employees, inventory or significant equipment usually don't. The test is applied each year.

Corporations doing business in DC file Form D-20 and pay the corporation franchise tax at 8.25%, with the same minimum tax based on DC gross receipts ($250, or $1,000 above $1 million).

Both returns are due April 15 for calendar-year filers, or the 15th day of the 4th month after year end for fiscal-year filers.

DC does not offer an elective pass-through entity tax like Virginia or Maryland. DC residents may claim a credit for PTET that another state collected on their behalf.

DC did not adopt several federal business changes. It does not allow bonus depreciation, qualified production property depreciation or the higher Section 179 amounts, and it requires research costs to be amortized over five years instead of deducted right away. That means DC taxable income can differ from federal income. See 2025 tax law changes for businesses.