District of Columbia Reduces Taxes

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This edition of the SALT (State and Local Tax) Shaker was prepared by Amy Garlitz, CPA, a member of the KatzAbosch SALT Group.

The District of Columbia has enacted emergency legislation that impacts business and individual income taxes as well as sales tax. The FY2015 Budget Support Emergency Act is effective immediately and will be in place until the permanent legislation (FY2015 Budget Support Act) is approved by Congress. Some of the changes from the Emergency Act are as follows:

• A reduction in the franchise tax rate over time from 9.975% to 8.25%.

• Change to a single weighted sales factor method for apportionment purposes.

• The adoption of a market based methodology for sourcing service revenue based on where the customer is located.

• Increases to the standard deduction and personal exemptions for individual income taxes.

• Expansion of the sales tax base to include selected services such as health clubs and tanning studios.

amuPlease contact the KatzAbosch SALT (State and Local Tax) Group or Amy Garlitz, CPA at agarlitz@katzabosch.com or 410.307.6528 if you have any questions regarding these changes to the DC tax laws.

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