Summary
The Washington D.C. Council has passed a temporary law to stop certain parts of their tax code from matching federal tax changes introduced by President Donald Trump's One Big Beautiful Bill Act. This decision prevents tax breaks on tips and overtime pay from applying to local taxes, impacting hospitality workers in D.C.
Key Facts
- The D.C. Council voted to decouple parts of its tax code from federal law, rejecting 13 out of 84 new tax provisions under the OBBB Act.
- The change means D.C. workers can’t deduct tips and overtime pay on their local taxes, although they can on federal taxes.
- Under the federal law, single filers could claim up to $25,000 in tips and $12,500 in overtime for deductions.
- D.C. is facing over a $1 billion revenue shortfall in the next three years due to job losses and increased costs.
- The council expects to save millions in revenue by rejecting these federal tax provisions.
- Part of the saved revenue will fund local priorities like a new child tax credit and matching the federal Earned Income Tax Credit.
- The emergency measure is designed to last 90 days, with plans for a temporary extension of 225 days.
- A permanent change will need more approval and possibly public input.
