District of Columbia Hourly Paycheck and Payroll Calculator

District of Columbia Hourly Paycheck Calculator

When you think about the capital of the United States, you might immediately conjure images of memorials, museums, and its many federal buildings. However, the District of Columbia (DC) is also a great place to run a small business. In addition to politics, it’s important to stay on top of DC payroll tax and compliance requirements. Don’t worry, we’re here to help! Below, we’ve compiled the basic information about payroll taxes and rules in the District of Columbia that you need to know.

District of Columbia payroll taxes

Here’s what you need to know about withholding payroll taxes in the District of Columbia.

• District of Columbia payroll taxes start with employees filling out Form D-4. This information helps you determine how much you should withhold. 
• If an employee does not complete this form, you will need to withhold tax as though no exemptions were claimed.
• Employees need to update Form D-4 in case of life events (such as marriage, divorce, birth or adoption of a child, etc.) which may impact their taxes.
• The personal income tax rate in the District of Columbia is 4.0%–10.75%.
• The District of Columbia has reciprocity with the following states: Maryland and Virginia.

Additional District of Columbia forms

In addition to Form D-4 mentioned above, District of Columbia employers also need to file the following forms:

1. Employer’s Withholding Tax – Annual Return (FR900A*)
2. Employer’s Withholding Tax – Monthly Return (FR900M**)
3. Employer’s Withholding Tax – Quarterly Return (FR900Q)
4. District of Columbia Payment Voucher for Withholding Tax (DC FR-900P*)
5. DC New Hire Report
6. Wage and Tax Statement (State W2)
7. Employer’s Quarterly Contribution and Wage Report (DC UC-30)
8. Employer’s Quarterly Contribution and Wage Report (DOES PFL-30)

District of Columbia unemployment tax rate

The District of Columbia requires most employers to pay unemployment insurance tax to help compensate workers who are out of work through no fault of their own. 

• Employers pay District of Columbia unemployment tax on the first $9,000 of an employee’s wages.
• New employers pay at a rate of 2.7%.
• Experienced employers pay at a rate of 1.6–7%.
• Unemployment tax in the District of Columbia should be paid quarterly through the Employer Registration Wizard.

Employers who are not newly liable pay a tax rate that is based on their experience in the unemployment insurance program, which is determined by several factors. Washington, DC, has a comprehensive employer handbook that covers unemployment tax and reporting requirements in detail.

Paying District of Columbia taxes

Here’s what you need to know about paying District of Columbia taxes:

• How often employers pay depends on the amount of tax you withhold in a year. 
• District of Columbia’s payment frequencies are: monthly, quarterly, annually.

Other District of Columbia taxes

District of Columbia employers are also required to pay or withhold the following taxes.

• Paid Family Leave

District of Columbia minimum wage

In 2023, the minimum wage in the District of Columbia is $16.50 for 2023—until July 1, 2023 when it increases to $17.00.

District of Columbia overtime pay

Because the District of Columbia doesn’t have any state law governing overtime pay, the federal rules under the Fair Labor Standards Act apply. Generally speaking, hourly employees are to be paid time-and-a-half for all hours worked over 40 hours in a week.

Federal payroll taxes

In addition to District of Columbia-specific taxes, both you and your employees will pay a variety of federal payroll taxes. Check out the breakdown below.

Federal income tax

Unless they are exempt, your employees will pay federal income tax.

• You must withhold federal income tax from employees’ pay, unless they are exempt. 
• Each employee’s Form W-4 will differ based on their filing status and dependents, among other details—so the amount of income tax to be withheld will vary.
• Form W-4 does not need to be sent to the IRS, but should be kept for your records.

FICA

Both you and your employees will pay Federal Insurance Contributions Act, or FICA tax.

• FICA is made up of the Medicare tax and the Social Security tax. 
• In 2023, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $2,600. 
• The Medicare tax requires employers and employees to each contribute 1.45% of all wages. 
• See the IRS webpage for details, like maximum thresholds.

FUTA

Like the state, the federal government also has an unemployment tax, called FUTA, which is paid by employers.

• FUTA is an annual tax an employer pays on the first $7,000 of each employee’s wages. 
• The FUTA rate for 2023 is 6.0%, but many employers are able to pay less, for instance, up to 5.4% each year due to tax credits.

Most employers will pay this tax annually with Form 940. But larger employers with more than $500 in tax due will have to pay quarterly.

Additional Medicare tax

The Additional Medicare tax is paid by employees. Here’s what you should know:

• For employees who earn over $200,000 per year, 0.9% of earnings will need to be withheld for the Additional Medicare tax. 
• Whether or not your employee owes this tax may depend on their filing status.

Paying federal taxes

How often you’ll pay federal payroll taxes depends on how much you owe.

• Semi-weekly or monthly payments are required for federal withholding, Additional Medicare, and FICA taxes. And every quarter, a summary payroll tax return is due on Form 941, Employer’s Quarterly Federal Tax Return.

Quarterly or annual payments are required for federal unemployment tax. Most employers will pay annually, but quarterly payments are necessary if you owe more than $500. Each time you make a payment, you’ll need to file a payroll tax return on Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return.

Workers’ Compensation

Requirements to obtain Workers’ Compensation vary by state. This table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.

New hires

Employers in District of Columbia need to report new employees.

• New hires must be reported to the District of Columbia Directory of New Hires.
• New hires must be reported within 20 days of their first day of work. 

Payroll stubs

You must provide a pay stub to every employee that includes:

1. Company’s legal name and address
2. Employee’s name and last four digits of their Social Security number
3. Pay period beginning and end dates
4. Total hours worked
5. Rate of pay
6. Gross wages
7. The amount and reason for any deduction

Final paychecks

Employers must pay final wages to employees within a certain timeframe, depending on the circumstances for leaving.

• If a worker voluntarily resigns, you’re required to pay them the day after their last day.
• For layoffs and involuntary terminations of employment, you’re required to pay them on or before the company’s next regular payday, or within seven days of their last day.

Time off

District of Columbia law requires employers to provide the following types of time off to employees.

• Jury duty
• Voting leave: In some circumstances, employers are obligated to provide up to two hours of paid time off to allow employees to vote.
• Family & parental leave applies to employers with 20 or more employees, and employers that pay unemployment insurance on behalf of their employees. 
• Sick leave
• Domestic violence leave per the paid sick leave law

We’re here to help

If you don’t love manual number crunching and payroll taxes sound overwhelming to you, take advantage of Gusto’s full-service payroll options or use an experienced accountant to help you with the process.