Self-employed taxes and LLC costs in District of Columbia, 2026
The District taxes many unincorporated businesses as businesses, on top of the owner's income tax, and it ignores the federal S election.
Total tax on this income in 2026
$21,546
Put aside 25% of each payment · $5,387 per quarter
| Self-employment tax (15.3%) | $12,010 |
| Federal income tax | $5,790 |
| District of Columbia income tax | $3,746 |
| QBI deduction used | $12,579 |
| Effective rate on all income | 25.3% |
With an S corp election and a $34,000 salary, about $3,631 less tax (check it).
Computed by Radif Partners from IRS and District of Columbia agency documents read on October 15, 2026 · How we calculate
In the District of Columbia an LLC costs $99 to register and $300 for each biennial report, plus a basic business license. The owner's profit is taxed on the DC individual return at rates from 4 % to 10.75 %; on $75,000 of profit a single filer owes about $3,084 to the District and $18,579 in all. Two District rules change the picture. Sole proprietorships, partnerships and LLCs with more than $12,000 of DC gross receipts owe the unincorporated business franchise tax as well, after a salary allowance for owners and a $5,000 exemption, unless more than 80% of their income comes from the owners' personal services. And DC does not recognize S corporations: an S corp files Form D-20 and pays the corporate franchise tax like a C corporation. The S election that saves federal payroll tax therefore buys no District relief, and the calculator's comparison here leaves that franchise tax out.
District of Columbia at a glance, 2026
| LLC filing fee | $99 |
| Biennial Report | $300 every two years |
| Income tax | 4 % to 10.75 % |
| S corporation election | not recognized |
| Tax on $75,000 of profit (single) | $18,579 in all, $3,084 to District of Columbia |
Washington is one of very few places in the country that taxes an unincorporated business as a taxpayer in its own right. The unincorporated business franchise tax, filed on Form D-30, reaches sole proprietorships, partnerships and LLCs carrying on business in the District once their DC gross receipts pass $12,000 (OTR, business franchise tax rates). Before the tax applies, the business deducts a salary allowance of 30% of net income for its owners and a $5,000 exemption. The minimum is $250 when DC gross receipts are $1,000,000 or less and $1,000 above. The rate is published by the Office of Tax and Revenue on the same page; its table runs through 2025, so this page does not print a 2026 figure and the calculator above does not add the tax.
Your set-aside rate by state
Set aside in District of Columbia
24%
| Per quarter | $3,917 |
| District of Columbia income tax | $2,480 |
The personal services exemption
Many freelancers never pay it. A business is exempt when more than 80% of its gross income comes from the personal services of its owners and capital is not a material income-producing factor, and also when the trade or profession cannot by law be carried on as a corporation. A writer, developer or consultant working alone with a laptop is the typical case. A business that resells goods or relies on equipment is not, and owes the tax on top of the owner's income tax.
No S corporation in the District
The District does not follow the federal S election. An S corporation files Form D-20 and pays the corporation franchise tax exactly as a C corporation would, with the same $250 and $1,000 minimums (OTR, franchise tax FAQs). The federal saving on self-employment tax still exists, but part of it is handed back to the District. The LLC vs S corp calculator does not model the DC franchise tax, so its result for the District overstates the saving; the C corporation guide explains how a tax at the company level works.
Estimated tax from $100
The threshold for individual estimated payments is unusually low: you are expected to pay during the year once your DC tax liability is greater than $100 (OTR, underpayment interest). A business filing D-20 or D-30 makes its own estimated franchise tax payments when it expects to owe more than $1,000. The four individual dates are the federal ones, listed in the quarterly estimated tax guide.
Licenses and reports
Registration with the Department of Licensing and Consumer Protection costs $99, and the LLC's biennial report, due April 1 of each reporting year, costs $300. Most businesses also need a basic business license: $99 for a two-year general license, $49 for six months or $198 for four years (DLCP fees).
District of Columbia income tax brackets
| Taxable income, single | Rate | Taxable income, joint | Rate |
|---|---|---|---|
| $0 to $10,000 | 4 % | $0 to $10,000 | 4 % |
| $10,000 to $40,000 | 6 % | $10,000 to $40,000 | 6 % |
| $40,000 to $60,000 | 6.5 % | $40,000 to $60,000 | 6.5 % |
| $60,000 to $250,000 | 8.5 % | $60,000 to $250,000 | 8.5 % |
| $250,000 to $500,000 | 9.25 % | $250,000 to $500,000 | 9.25 % |
| $500,000 to $1,000,000 | 9.75 % | $500,000 to $1,000,000 | 9.75 % |
| over $1,000,000 | 10.75 % | over $1,000,000 | 10.75 % |
City and county taxes on business income in District of Columbia
| Place | Tax | Rate | Who pays |
|---|---|---|---|
| District of Columbia | Unincorporated Business Franchise Tax | 8.25% | Gross receipts $12,000 or less: not taxable. 30% owner salary allowance and $5,000 exemption. Exempt if >80% of gross income is from owners' personal services and capital is not material. Minimum $250 / $1,000. |