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Note: Washing DC’s general sales tax rate will increase to 6.5% on Oct. 1, 2025, and to 7.0% on Oct. 1, 2026.
Are you a Shopify merchant or SaaS startup struggling with sales tax compliance in Washington DC? This 2025 Washington DC sales tax guide breaks down everything you need to know, from understanding sales tax rates to registration and filing.
Jurisdiction | Sales tax rate |
---|---|
State tax | 6.0% |
Local tax | 0.0% |
Combined Tax | 6.0% |
The Washington DC sales tax rate is simple compared to other states because it has a uniform sales tax rate of 6.0%. No additional local taxes — county or city — exist in the federal district.
Washington DC is a destination-based state. So, sellers have to apply sales tax at the location of the sale or destination. The general sales tax rate in DC is 6.0%, but there are scheduled tax rate hikes. Also, certain goods and services are taxed at higher or lower rates.
Here's how it works:
Let’s say a retailer in DC sells a laptop to a customer.
Sale price (Pre-taxed): $1,200
Washington DC sales tax rate (general): 6.00%
Sales tax: $1,200 × 0.06 = $72.00
Total charged to customer: $1,200 + $72 = $1,272.00
Using a sales tax calculator simplifies this process by automating the calculations, ensuring retailers charge the correct Wisconsin sales and use tax to customers. Calculate your sales tax using Kintsugi’s sales tax calculator.
Sales tax nexus in Washington DC determines whether your business is required to collect and remit sales tax. Nexus can be established through physical presence, economic activity, or marketplace sales, triggering specific tax obligations for sellers.
Physical nexus applies when you have a physical location in DC or are running a business in the district.
Here's what might create a nexus for you in Washington DC:
Washington DC enforces economic nexus, requiring remote sellers to collect sales tax when they meet at least one of the following thresholds:
Washington DC offers specific sales tax exemptions for certain goods, services, and buyers in 2025. Understanding these exemptions helps businesses apply the correct tax rules and stay compliant.
In Washington DC, most tangible goods and many services are subject to sales tax. Prepared food, alcoholic beverages, clothing, and furniture are taxable. Businesses must also collect tax on services like parking, fitness memberships, and hotel accommodations. Software as a Service (SaaS) and cloud-based software subscriptions are also taxable.
Here's an overview of the taxable goods and services in Washington DC.
Taxable Goods | Taxable Services |
---|---|
Tangible personal property (unless specifically exempt) | Software as a Service (SaaS) and cloud-based software |
Prepared food and beverages (including restaurant meals and catering) are taxed at 10% | Data processing and information services |
Alcoholic beverages | Janitorial and cleaning services |
Soft drinks (8% tax rate) | Parking services (18% tax rate) |
Clothing and footwear (no general exemption or threshold) | Towing services |
Furniture and appliances | Storage and warehousing |
Electronics and home goods | Health club memberships and fitness classes |
Cosmetics and toiletries | Dry cleaning and laundry services (excluding self-service) |
Jewelry and accessories | Telecommunication services |
Motor vehicles | Hotel and short-term accommodations (15.95% tax rate) |
Art and collectibles | Car rentals and shared vehicle services |
Washington DC exempts certain essential items and transactions, such as unprepared food, prescription drugs, medical devices, and sales to qualifying nonprofits or government entities.
These are the items that are tax-exempt in the district:
No documentation is needed when purchasing universally exempt items, such as diapers and feminine hygiene products, in DC. However, when a buyer claims an exemption from sales tax based on their status or intended use, a valid sales tax certificate of exemption must be provided.
A DC Sales Tax Exemption Certificate is an official document that allows eligible buyers to purchase certain goods or services without paying sales tax in the district. It is used to certify that the buyer qualifies for a tax exemption based on their status (e.g., nonprofit, government agency) or the intended use of the purchase (e.g., resale).
There are different types of exemption certificates based on purpose and eligibility.
2. Utility Exemption Certificate (OTR-308)
3. Contractor’s Exempt Purchase Certificate (OTR-553)
4. Certificate of Resale (OTR-368)
5. QHTC Exempt Purchase Certificate (FP-337)
If your business sells taxable goods or services in Washington DC, you must register for a DC sales tax permit before making any sales. This process—officially known as sales tax registration—grants your business the authority to collect and remit sales tax to the District of Columbia.
Here’s a step-by-step guide to registering for a Washington DC sales tax permit.
You must register if you:
Before you start the registration process, collect the following:
Visit https://mytax.dc.gov
→ Click “Register a New Business”
→ Select “Register for a New Tax Account (FR-500)”
Follow the online prompts to complete Form FR-500, which includes:
Once you receive your sales tax permit, you can begin collecting tax in Washington DC for taxable transactions. You also need to file and remit sales tax.
File faster, smarter, and on time with Kintsugi.
Once your business is registered and has a Washington DC sales tax permit, you’re required to file and remit sales tax. Even if no sales are made, you have to file a $0 return to remain in good standing. Filing ensures that the District receives the correct amount of tax collected from your customers and keeps your business compliant with local tax laws.
Here are the requirements that you should complete when filing for sales tax returns.
1. Sales Records
2. Exemption Certificates
3. Purchase and Expense Records
4. Filing Confirmation
5. Business Registration Info
The OTR assigns your filing frequency when you first register for sales tax (via Form FR-500 on MyTax.DC.gov). It may also adjust your filing frequency later based on your actual reported tax liability. You’ll be notified by mail or through your http://MyTax.DC.gov account if a change occurs.
The assigned filing frequency will be any of the three — monthly, quarterly, or annual.
Monthly Filing
Quarterly Filing
Annual Filing
Frequency | Due Date |
---|---|
Monthly | Every 20th of the following month. |
Quarterly | Every 20th of the month following the quarter’s end. |
Annually | January 20 of the following year. |
Note that if the due date falls on a weekend or holiday, the return is due on the next business day.
Are Groceries & Prescription Drugs Exempt from Tax in Washington DC?
Yes. Unprepared food (groceries) and prescription drugs are fully exempt from sales tax in Washington DC. These exemptions help reduce the tax burden on essential items.
Does DC Have a Sales Tax Holiday?
No, after the district decided to repeal it in 2009. So, all taxable goods and services are subject to sales tax year-round.
How Is Use Tax Reported in DC?
Use tax is reported on the DC sales and use tax return via MyTax.DC.gov. Businesses must self-assess and remit use tax on taxable items purchased without paying DC sales tax, such as out-of-state or online purchases.
Are Digital Goods Taxed in DC?
Yes, digital goods are taxable, including downloaded music, videos, e-books, and SaaS. These are treated as tangible personal property for tax purposes.
Visit the state’s official website and contact them directly for up-to-date information. These resources are your go-to for questions, forms, and guidance straight from the state.
At Kintsugi, we're dedicated to sharing our deep expertise in B2B financial technology and sales tax automation. Dive into our insights hub for essential guidance on navigating complex compliance challenges with AI-driven solutions. Explore practical strategies, industry trends, and regulatory updates tailored to enhance your operational efficiency. Trust Kintsugi to empower your business with comprehensive knowledge and innovative tools for seamless sales tax management.
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