Article
3 min read
Your Ultimate Guide to District of Columbia Payroll
US payroll
Author
Shannon Ongaro
Published
August 04, 2023
Last Update
February 26, 2025
Key takeaways
- Employers in DC are responsible for managing various payroll tax obligations including UI taxes, PIT withholding, PFL contributions, and federal taxes.
- DC businesses can conveniently manage UI taxes, PIT withholding, and PFL contributions through online portals provided by the Department of Employment Services and the Office of Tax and Revenue.
- Workers’ compensation insurance compliance is crucial for all DC employers, ensuring protection for workers and businesses in case of workplace injuries, regardless of the workforce size.
Employers have to navigate a variety of regulations and requirements to ensure proper payroll withholding in each US state. This guide serves as an introduction to what employers need to pay and withhold from payroll in the District of Columbia (DC), including unemployment insurance, personal income tax, and workers’ compensation.
Unemployment insurance (UI) in DC
Unemployment insurance (UI) is a federal program overseen by the US Department of Labor, designed to provide temporary financial assistance to individuals who lose their jobs through no fault of their own. As an employer in DC, you are responsible for paying the UI tax.
The UI tax rate varies based on factors such as your business’s history of layoffs and the overall health of the unemployment insurance fund. New employers start at 2.7% or the average rate for the past year, whichever is highest. They pay this for four to five years until the state has accrued enough data about their business to set an individual rate.
You can manage your DC Unemployment Insurance through the online portal provided by the DC Department of Employment Services. For detailed information on paying UI taxes, refer to the resources available on their website.
Personal income tax (PIT) for DC employees
Personal income tax, often referred to as individual income tax or state income tax, is a tax on the income of DC residents. As an employer, you are required to withhold this tax from your employee's wages and remit the amount to the District. The withholding amount is based on the employee's income and the applicable tax rates.
Here are the tax rates for 2025:
| Taxable income | Fixed sum + rate |
|---|---|
| $10,000 or less | 4% |
| $10,000 to $40,000 | $400 plus 6% of the excess over $10,000 |
| $40,000 to $60,000 | $2,200, plus 6.5% of the excess over $40,000 |
| $60,000 to $250,000 | $3,500, plus 8.5% of the excess over $60,000 |
| $250,000 to $500,000 | $19,650, plus 9.25% of the excess over $250,000 |
| $500,000 to $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 |
To pay the withheld amount, you can use DC's online portal provided by the Office of Tax and Revenue. Their website offers comprehensive instructions and tables to assist you in understanding and fulfilling your obligations regarding PIT withholding.
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Paid family leave (PFL) benefits
The District of Columbia offers paid family leave (PFL) benefits to employees, allowing them to take time off for various family-related reasons. These include bonding with a new child, caring for a family member with a serious health condition, and addressing their own serious health condition.
As an employer, you are responsible for paying contributions toward the PFL program. The rate for 2025 is 0.75% of each employee’s wages.
Payments are due quarterly on the:
- April 30th
- July 31st
- October 31st
- January 31st
You can easily file and pay your contributions to PFL through the designated online portal offered by the DC Department of Employment Services. For further guidance on handling PFL contributions, see their website, which provides comprehensive information for employers.
DC Workers’ compensation
Workers’ compensation is an insurance program designed to provide coverage for employees who get sick or injured as a result of performing their job duties. In DC, employers are required to obtain workers’ compensation insurance, even if they have just one employee.
To ensure compliance, you must purchase workers’ compensation insurance from a qualified commercial carrier in the District. Visit the DC Department of Employment Services website to find an appropriate carrier that adheres to the state’s regulations for workers’ compensation.
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Simplify US payroll tax compliance with Deel
While this guide provides essential information on DC payroll taxes, payroll compliance and state requirements extend beyond what is covered above. To streamline the process and ensure full compliance, companies can turn to Deel.
Deel offers a comprehensive solution for managing US and international payroll, including payments, taxes, worker classification, and more. Speak with an expert today to see how you can streamline your US payroll processes and ensure compliance with state regulations.
Disclaimer: This article is provided for general informational purposes and should not be treated as legal or tax advice. Consult a professional before proceeding.
About the author
Shannon Ongaro is a content marketing manager and trained journalist with over a decade of experience producing content that supports franchisees, small businesses, and global enterprises. Over the years, she’s covered topics such as payroll, HR tech, workplace culture, and more. At Deel, Shannon specializes in thought leadership and global payroll content.
