Code of the District of Columbia

§ 47–1806.04. Tax on residents and nonresidents — Credits — In general.

(a) The amount of tax payable under this subchapter by a resident of the District in respect to the taxable year shall be reduced by a credit equal to the amount of individual income tax such individual is required to pay and, in fact, has paid to any state, territory or possession of the United States, or political subdivision thereof, upon income attributable to such state, territory or possession of the United States, or political subdivision thereof, for such taxable year or portion thereof while concurrently a resident of the District. The credit provided under this subsection shall not exceed the proportion of the tax otherwise due under this chapter that the amount of the individual’s adjusted gross income received by him, or accrued to him if on an accrual basis, subject to tax in the other jurisdiction bears to his entire adjusted gross income received by him, or accrued to him, while he was concurrently a resident of the District. The Mayor may require satisfactory proof of the payment of such income taxes to another jurisdiction. The credit provided by this subsection shall not be allowed against any tax imposed under §§ 47-1808.01 through 47-1808.06. Beginning with any taxable year after December 31, 1990, no franchise tax, license tax, excise tax, unincorporated business tax, occupation tax, or any tax characterized as such by the other taxing jurisdiction, even if applied to earned or business income, shall qualify as a credit under this section.

(b) The amount deducted and withheld as tax under this chapter during any calendar year upon the wages of any individual shall be allowed as a credit to the recipient of the income against the tax imposed by this chapter, for taxable years beginning in such calendar year. If more than 1 taxable year begins in such calendar year such amount shall be allowed as a credit against the tax for the last taxable year so beginning.

(c)(1) If a return is filed for a full calendar or fiscal year beginning after December 31, 1988, an individual who incurs household and dependent care services necessary to engage in gainful employment and who is allowed a credit under § 21 of the Internal Revenue Code of 1986, shall be allowed, against the tax imposed by this chapter for the taxable year, an amount equal to 32% of the credit allowed under § 21 of the Internal Revenue Code of 1986, regardless of the amount of the credit actually used to offset federal tax liability.

(2) If a return is filed for a period of less than a full calendar or fiscal year beginning after December 31, 1988, the credit allowed under this subsection shall be the credit calculated according to the provisions of paragraph (1) of this subsection, multiplied times the ratio that the employment-related expenses, allowed under § 21 of the Internal Revenue Code of 1986 and incurred during the period of residency in the District, bear to the total employment-related expenses allowed under § 21 of the Internal Revenue Code of 1986, and incurred for the whole taxable year.

(3) In no event shall the credit allowed under paragraph (1) or (2) of this subsection exceed the amount of tax otherwise due without reference to this subsection.

(d) This section shall take effect in accordance with the provisions of § 1-206.02(c)(1) and shall apply to taxable years beginning after December 31, 1978.

(e)(1)(A) If a return is filed for a full calendar year, the amount of the tax payable under this subchapter by a resident of the District with respect to the taxable year shall be reduced by a low income credit designed to make the District’s income tax threshold equal to the federal income tax threshold. For the purposes of this subsection, the term “tax threshold” means the point at which a taxpayer begins to owe income tax after allowance of the standard deduction and all personal exemptions to which the taxpayer is entitled, but before application of any itemized deductions or credits. The credit shall be calculated in accordance with a table prescribed by the Chief Financial Officer.

(B)(i) If a return is filed for a period of less than a full calendar year beginning after December 31, 2014, the income eligibility for the credit allowed under this subsection shall be determined by annualizing the income earned during the portion of the year the taxpayer was a District resident.

(ii) If a part-year resident meets the annualized income and other requirements of this subsection, the part-year resident shall be entitled to the pro rata share of the credit allowed by the annualized income. The pro rata share shall be determined by multiplying the credit allowed, from the table prescribed by the Chief Financial Officer, for the annualized income by the fraction consisting of the number of days the taxpayer was a District resident over 365 days (or, in the case of a leap year, 366 days).

(2) The credit provided for in paragraph (1) of this subsection shall not be allowed to a resident:

(A) Who has a federal tax liability determined in accordance with section 55 of the Internal Revenue Code of 1986;

(B) Who has net federal adjusted gross income in excess of the minimum federal income tax filing requirements. For the purposes of this subparagraph, the term “net federal adjusted gross income” means federal adjusted gross income less:

(i) Taxable refunds, credits, or offsets of state and local income tax;

(ii) Tax-exempt municipal bond interest income; and

(iii) Federal taxable amount of social security or tier 1 railroad retirement income; or

(C) Who has elected to claim the earned income tax credit provided for in subsection (f) of this section.

(3) In no event shall the credit allowed under paragraph (1) of this subsection exceed the amount of the tax otherwise due without reference to this section.

(4) For taxable years beginning after December 31, 2017, the credit provided for in paragraph (1) of this subsection shall no longer be allowed.

(f)(1)(A) If a return is filed for a full calendar or fiscal year beginning after December 31, 2004, an individual who is allowed an earned income tax credit under section 32 of the Internal Revenue Code of 1986 shall be allowed a credit against the tax imposed by this chapter for the taxable year in an amount equal to 40% of the earned income tax credit allowed under section 32 of the Internal Revenue Code of 1986; provided, that the credit shall not be allowed to a resident who has elected to claim the low income tax credit provided for in subsection (e) of this section.

(B) If a return is filed for a full calendar or fiscal year beginning after December 31, 2014, an individual with a qualifying child who is eligible for and claimed an earned income tax credit on their federal tax return under section 32 of the Internal Revenue Code of 1986 shall be allowed a credit against the tax imposed by this chapter for the taxable year in an amount equal to 40% of the earned income tax credit allowed under section 32 of the Internal Revenue Code of 1986; provided, that the credit shall not be allowed to a resident who has elected to claim the low income tax credit provided for in subsection (e) of this section.

(B-1) If a return is filed for a full calendar or fiscal year beginning after December 31, 2021, an individual with a qualifying child who is allowed an earned income tax credit under section 32 of the Internal Revenue Code of 1986 shall be allowed a credit against the tax imposed by this chapter for the taxable year in an amount equal to 70% of the earned income tax credit allowed under section 32 of the Internal Revenue Code of 1986.

(B-2) If a return is filed for a full calendar or fiscal year beginning after December 31, 2024, an individual with a qualifying child who is allowed an earned income tax credit under section 32 of the Internal Revenue Code of 1986 shall be allowed a credit against the tax imposed by this chapter for the taxable year in an amount equal to 85% of the earned income tax credit allowed under section 32 of the Internal Revenue Code of 1986.

(B-3) (B-3) If a return is filed for a full calendar or fiscal year beginning after December 31, 2025, an individual with a qualifying child who is allowed an earned income tax credit under section 32 of the Internal Revenue Code of 1986 shall be allowed a credit against the tax imposed by this chapter for the taxable year in an amount equal to 100% of the earned income tax credit allowed under section 32 of the Internal Revenue Code of 1986

(C)(i) If a return is filed for a full calendar or fiscal year beginning after December 31, 2014, an individual without a qualifying child who is eligible for an earned income tax credit on their federal tax return under section 32 of the Internal Revenue Code of 1986 (without regard to the limit in section 32(a)(2) of the Internal Revenue Code of 1986) shall be allowed a credit against the tax imposed by this chapter in an amount equal to the credit percentage of so much of a taxpayer’s earned income as does not exceed the earned income amount.

(ii) The amount of the credit allowable to a taxpayer under subsubparagraph (i) of this subparagraph for any taxable year shall not exceed the credit percentage of the earned income amount, over the phaseout percentage of 8.48% of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds the phaseout amount of $17,235, increased annually by the cost-of-living adjustment.

(2) If a return is filed for a period of less than a full calendar or fiscal year beginning after December 31, 2004, the credit allowed under this subsection shall be reduced to the amount that bears the same ratio to the credit computed under the provisions of paragraph (1) of this subsection as the number of months in the period for which the return is made bears to 12 months.

(3)(A) The credit allowed under this subsection shall be refundable to the individual claiming the credit.

(B)(i) For the taxable year ending December 31, 2022, the amount equal to 40% of the earned income tax credit allowed under section 32 of the Internal Revenue Code of 1986 shall be paid to the individual in one lump sum payment, and:

(I) If the amount of the remaining refund is at least $600, the remaining refund shall be paid in 11 equal monthly payments; or

(II) If the amount of the remaining refund is less than $600, the remaining refund shall be paid in one lump sum payment.

(ii) For taxable years beginning after December 31, 2022:

(I) If the amount of the earned income tax credit allowed is at least $1,200, the entire amount of the earned income tax credit allowed shall be paid to the individual in 12 equal monthly payments; or

(II) If the amount of the earned income tax credit allowed is less than $1,200, the entire amount of the earned income tax credit allowed shall be paid to the individual in one lump sum payment.

(iii) No interest shall be allowed on any refund payments made under this subparagraph.

(iv) Notwithstanding sub-subparagraphs (i) and (ii) of this subparagraph, the entire amount of a credit to be refunded shall be immediately subject to the offset provisions of [subchapter III of Chapter 44 of this title].

(v) The Chief Financial Officer shall send a notice to every individual whose refund, or any portion thereof, will be paid in monthly refund payments pursuant to sub-subparagraphs (i)(I) or (ii)(I) of this subparagraph.

(vi) Notwithstanding sub-subparagraph (i) of this subparagraph, any refunds to be paid pursuant to paragraph (1)(C) of this subsection shall be paid in one lump sum for the taxable year ending December 31, 2022.

(4) For the purposes of this subsection, credit percentage, earned income, earned income amount, and qualifying child shall have the same meanings as provided in section 32 of the Internal Revenue Code of 1986.

(g)(1) A taxpayer described in paragraph (2) of this subsection, and who otherwise would not qualify for the earned income tax credit under subsection (f)(1)(C) of this section or subsection 32(b) of the Internal Revenue Code of 1986, shall be allowed a credit equal to the credit allowed in subsection (f) of this section.

(2) To qualify for a credit as described in subsection (f) of this section, a taxpayer shall satisfy all the following requirements during the entire period for which the taxpayer seeks the credit:

(A) The taxpayer shall be a District resident taxpayer;

(B) The taxpayer shall be between the ages of 18 and 30;

(C) The taxpayer shall be the parent of a minor child with whom the taxpayer does not reside;

(D) A court order shall require the taxpayer to make child support payments, which are payable through a government-sponsored support collection unit, which order must have been in effect for at least one-half of the taxable year for which the taxpayer is seeking the credit; and

(E) The taxpayer shall have paid an amount in child support in the taxable year at least equal to the amount of current child support due during the taxable year for which the taxpayer is seeking the credit.

(3) Any refunds paid pursuant to this subsection shall be paid in the manner described in subsection (f)(3) of this section.