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
District of Columbia income tax
Residents of Washington, DC, who have lived there at least 183 days in a year pay a progressive district income tax. All DC residents who pay income taxes must fill out the D-4 Withholding Allowance Certificate.
|If the taxable income is:||The tax is:|
|Not over $10,000||4% of the taxable income.|
|Over $10,000 but not over $40,000||$400, plus 6% of the excess over $10,000.|
|Over $40,000 but not over $60,000||$2,200, plus 6.5% of the excess over $40,000.|
|Over $60,000 but not over $250,000||$3,500, plus 8.5% of the excess over $60,000.|
|Over $250,000 but not over $500,000||$19,650, plus 9.25% of the excess over $250,000.|
|Over $500,000 but not over $1,000,000||$42,775, plus 9.75% of the excess above $500,000.|
|Over $1,000,000||$91,525, plus 10.75% of the excess above $1,000,000.|
District of Columbia unemployment tax
New employers in Washington, DC, pay an unemployment tax rate of either 2.7%—or a rate that is equal to the average rate of payments from all employers the previous year, whichever is higher.
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.
Other District of Columbia paycheck rules
- New hire reporting: New or rehired employees must be reported within 20 days of starting work.
- Workers’ Compensation insurance: 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.
- Minimum wage: The District of Columbia minimum wage is $16.10 per hour for non-tipped employees and $5.35 for tipped employees.
- Final paychecks: When someone voluntarily quits or resigns, final wages are due by the next regular payday. If you terminate a person’s employment, then final wages are due by the next business day.
- Overtime: Hourly employees must be paid overtime—at least time and a half of their regular pay rate—for all hours worked over 40 in a week.
Federal payroll taxes in the District of Columbia
There are four key federal taxes that employers must know about. One is paid only by the employer, two are paid only by the employee, and one is paid by both the employer and employee.
|Federal Payroll Taxes|
Federal unemployment tax (FUTA)
Like the District, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.
Federal income tax (FIT)
Workers need to pay their federal income tax throughout the year. That means you’ll need to withhold the tax from their paychecks and send it to the IRS on their behalf.
How much you’ll take out depends on many factors, and the process starts with Form W-4, Employee’s Withholding Certificate. Have each employee fill this out when they start working for you. Using the information from Form W-4, the employee’s pay amount, and the federal withholding tables, you’ll be able to figure out how much to take out. Instead of figuring this out for each employee for each pay period, consider using payroll software to automatically make the calculations.
Additional Medicare tax
You’re required to withhold the Additional Medicare tax from any employee earning more than $200,000 per year. The withholding rate is 0.9% on all wages greater than $200,000.
Federal Insurance Contributions Act tax (FICA)
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
|Social Security tax||6.2% of the first $147,000 in wages in 2022|
|Medicare tax||1.45% on all wages|
Paying federal payroll taxes and filing returns
Now that you’ve calculated how much tax you owe, you’ll need to send the money off to the IRS. How frequently you’ll do it depends on how much you owe.
FICA, FIT, and Additional Medicare tax
These three taxes (FIT, FICA, and Additional Medicare) are paid at the same time and are typically paid either monthly or semi-weekly, depending on how much is due—though large amounts may require a next-day payment.
Regardless of how frequently you pay these three taxes, you’ll need to submit quarterly summary reports on Form 941, Employer’s Quarterly Federal Tax Return, which reconciles the amount of tax due with the amount of tax you’ve already paid.
Generally, FUTA is paid annually, but quarterly payments are required if you owe more than $500. Each time you pay, whether annually or quarterly, you’ll provide Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, to the IRS.
Feeling ready to cut those paychecks? Be sure to remember to file your payroll reports on time to avoid penalties. If you prefer to have professionals keep track of the deadlines, comprehensive payroll providers can calculate your payroll and file your payroll tax returns.