Washington DC LLC Taxes
After you start a Washington DC LLC, it's important to understand your tax obligations. The taxes your LLC owes depend on how it's classified, state and local rules, whether you sell taxable goods or services, and whether you have employees.
LLC Pass-Through Taxation
By default, LLCs don't pay taxes directly. Instead, the LLC members report the income (or losses) on their personal Form 1040 tax return. This is called pass-through taxation — tax responsibility "passes through" the LLC to its owners.
How Are LLCs Taxed in Washington DC?
By default, a Washington DC LLC is taxed by the IRS based on the number of members:
- An LLC with 1 owner (Single-Member LLC) is taxed like a Sole Proprietorship
- An LLC with 2+ owners (Multi-Member LLC) is taxed like a Partnership
These are the "default" statuses — automatically applied based on member count. You can also elect to have your LLC taxed as a Corporation (S-Corp or C-Corp) by filing extra paperwork with the IRS.
Single-Member LLC (default)
The IRS treats Single-Member LLCs as Disregarded Entities — the LLC doesn't file its own federal return. Instead, the owner reports LLC income on their personal Form 1040 (Schedule C if owned by an individual).
Multi-Member LLC (default)
Multi-Member LLCs file a Form 1065 Partnership Return and issue a Schedule K-1 to each member. Each member then reports their share of profits on their personal Form 1040.
Electing Corporate Taxation
- S-Corporation: File Form 2553 with the IRS. Can reduce self-employment taxes once the LLC has consistent profits (generally $70,000+ net income per member). Speak with an accountant first.
- C-Corporation: File Form 8832 with the IRS. Uncommon for small LLCs. Primarily useful for large employers offering healthcare fringe benefits.
Washington DC State Income Tax
Washington DC has a state income tax at rates of 4%–10.75% (graduated). LLC members report their share of LLC profits on their Washington DC state tax return.
Single-Member LLC owners file DC Form D-40 and include LLC income. Multi-Member LLCs file DC Form D-65 (Partnership Return) and issue DC K-1s to members. DC also imposes an Unincorporated Business Franchise Tax (UBFT) on LLCs with DC gross receipts — see below.
Contact the DC Office of Tax and Revenue (OTR) at 202-727-4829 for more information.
Washington DC Special LLC Taxes
DC Unincorporated Business Franchise Tax (UBFT)
Washington DC imposes an Unincorporated Business Franchise Tax (UBFT) on LLCs with DC gross receipts over $12,000. The tax rate is 8.25% on net income. The minimum tax is $250. LLCs with DC gross receipts of $12,000 or less are exempt.
This tax is filed annually using DC Form D-30. This is an entity-level tax paid by the LLC itself, separate from the members' individual DC income tax returns.
Local Income Tax
You and/or your LLC may also need to file and pay income taxes with your local municipality (city, county, etc.). Contact your local government or hire an accountant to confirm local requirements.
Washington DC Sales Tax
If your LLC sells taxable products (and sometimes services) in Washington DC, you may need to collect sales tax and register for a Seller's Permit (also called a resale license or sales tax permit).
Washington DC's sales tax rate is 6%. Food and non-alcoholic beverages are exempt. Restaurant meals are taxed at 10%. Hotels at 14.95%.
Register for Washington DC Seller's Permit →
Contact the DC Office of Tax and Revenue at 202-727-4829 with questions.
Washington DC LLC Payroll Taxes
If your Washington DC LLC has employees, you must handle payroll taxes, which include:
- Federal income tax withholding
- Washington DC state income tax withholding
- Social Security and Medicare taxes (FICA)
- Federal unemployment tax (FUTA)
- Washington DC state unemployment tax (SUTA)
Payroll calculations are complex — most LLC owners hire a payroll service or accountant.
Washington DC Tax Agency Contact
Washington DC LLC Taxes — FAQs
Read the step-by-step formation guide with filing fees, processing times, and annual report deadlines.