*NOTE: This section includes amendments by temporary legislation that will expire on September 25, 2026. To view the text of this section after the expiration of all emergency and temporary legislation affecting this section, click this link: Permanent Version .*
For the purposes of this chapter, unless otherwise required by the context, the term:
(1) “Affiliated group” means an affiliated group as defined in section 1504 of the Internal Revenue Code of 1986; provided, that the affiliated group shall not include any corporation that does not have gross income derived from sources within the District.
(2) “Aggregated effective tax rate” means the sum of the effective rates of tax imposed by the District of Columbia, states, or possessions of the United States, and foreign nations that have entered into comprehensive tax treaties with the United States government, where a related member receiving a payment of interest expense or intangible expense is subject to tax and where the measure of the tax imposed included the payment.
(3) “Apportioned net operating loss” means the net operating loss generated in the year of the loss multiplied by the District of Columbia’s apportionment formula for the loss year.
(A) "Basic standard deduction" means:
(i) For the taxable year ending December 31, 2025:
(I) In the case of a return filed by a single individual or married individual filing a separate return, $15,000;
(II) In the case of a return filed by a head of household, $22,500; and
(III) In the case of a return filed by married individuals filing a joint return, separate on a combined return, or a surviving spouse, $30,000; and
(ii) For taxable years beginning after December 31, 2025:
(I) In the case of a return filed by a single individual or married individual filing a separate return, $15,000, increased annually pursuant to the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded down to the next multiple of $50);
(II) In the case of a return filed by a head of household, $22,500, increased annually pursuant to the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded down to the next multiple of $50); and
(III) In the case of a return filed by married individuals filing a joint return, separate on a combined return, or a surviving spouse, $30,000 increased annually pursuant to the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded down to the next multiple of $50).
(B) For purposes of this paragraph, the term "cost-of-living adjustment" shall have the same meaning as set forth in paragraph (11) of this section; except, that the term "base year" shall mean the calendar year beginning January 1, 2025, or the calendar year beginning one calendar year before the calendar year in which the new dollar amount of the basic standard deduction shall become effective, whichever is later.
(4) “Blind” means a taxpayer whose central visual acuity does not exceed 20/200 in the better eye with correcting lenses or whose visual acuity is greater than 20/200 but is accompanied by a limitation in the field of vision such that the widest diameter of the visual field subtends an angle no greater than 20 degrees.
(5) “Business income” means all income that is apportionable under the Constitution of the United States.
(A) “Capital asset” means property defined or treated as a capital asset under the Internal Revenue Code of 1986.
(B) For the purpose of computing, for any taxable year, the tax imposed under this chapter with respect to sales or other dispositions of property referred to in subparagraph (A) of this paragraph, the provisions of the Internal Revenue Code of 1986 relating to the treatment of gains and losses (other than the alternative tax imposed by section 1201 of the Internal Revenue Code of 1986) shall apply.
(7) “Combined group” means the group of all persons whose income and apportionment factors are required to be taken into account pursuant to § 47-1805.02a(a) and (b) and the pertinent regulations in determining the taxpayer’s share of the net business income or loss apportionable to the District.
(8) “Commercial domicile” means the principal place from which the trade or business of the taxpayer is directed or managed.
(9) “Compensation” means wages, salaries, commissions, and any other form of remuneration paid to an employee for personal services.
(10) “Corporation” means:
(A) Any corporation as defined by the laws of the District or organization of any kind treated as a corporation for tax purposes under the laws of the District, wherever located, which, were it doing business in the District, would be subject to the tax imposed by this chapter;
(B) A joint-stock company, trust, association and S corporation as defined in section 1361(a) of the Internal Revenue Code of 1986, or other organization that is taxable as a corporation under federal income tax law.
(A) “Cost-of-living adjustment” means an amount, for any calendar year, equal to the dollar amount set forth in paragraph (44)(A), (B), and (C) of this section multiplied by the difference between the Consumer Price Index for the preceding calendar year and the Consumer Price Index for the base year, divided by the Consumer Price Index for the base year.
(B) For the purposes of this paragraph, the Consumer Price Index for any calendar year is the average of the Consumer Price Index for the Washington-Baltimore Metropolitan Statistical Area for all-urban consumers published by the Department of Labor, or any successor index, as of the close of the 12-month period ending on July 31 of such calendar year.
(C) For the purposes of this paragraph, the term "base year" shall mean the calendar year beginning January 1, 2011, or the calendar year beginning one calendar year before the calendar year in which the new dollar amount of a deduction or exemption shall become effective, whichever is later.
(12) “Deficiency” with respect to any tax imposed by this chapter means:
(A) The amount or amounts by which the tax imposed by this chapter, as determined by the Chief Financial Officer, exceeds the amount shown as the tax by the taxpayer upon his return; or
(B) The amount assessed as a tax by the Chief Financial Officer if no return is filed by the taxpayer.
(13) “Dependent” means a dependent as defined in section 152 of the Internal Revenue Code of 1986.
(14) “Dividend” means any distribution made by a corporation or financial institution (domestic or foreign) to its stockholders or members, out of its earnings, profits, or surplus, other than paid-in surplus, whenever earned by the corporation or financial institution and whether made in cash or in any other property (other than stock of the same class in the corporation or financial institution, if the recipient of the stock dividend has neither received nor exercised an option to receive the dividend in cash or in property other than stock instead of stock) and whether distributed before, during, upon, or after liquidation or dissolution of the corporation or financial institution; except, that in the case of any such distribution, any part of which for purposes of the income tax imposed under the Internal Revenue Code of 1986 is deemed to constitute a capital gain, such part shall be deemed to constitute a capital gain for purposes of the tax imposed by this chapter; provided, that in the case of any dividend that is distributed other than in cash or stock in the same class in the corporation or financial institution and not exempted from tax under this chapter, the basis of tax to the recipient shall be the market value of the property at the time of the distribution; provided further, that a dividend shall not include any dividend paid by a mutual life insurance company to its shareholders.
(15) “Doing business” means any activity of a partnership, corporation, or financial institution that enjoys the benefits and protection of the government and laws of the District.
(16) “Domestic partners” means persons who have registered their relationship with the District pursuant to § 32-702 .
(17) “Employee” means an individual having a place of abode or residing or domiciled within the District at the time the tax is required to be withheld in respect to the individual’s employment by another, and to every other individual who maintains a place of abode within the District for an aggregate of 183 days or more during the taxable year, whether domiciled in the District or not, including an officer of a corporation, but excluding any elective officer of the government of the United States or any officer or employee in the legislative branch of the government of the United States whose compensation is paid by the Secretary of the Senate or Clerk of the House of Representatives, any officer of the executive branch of the government of the United States whose appointment was made by the President of the United States, subject to confirmation by the Senate of the United States, and whose tenure of office is at the pleasure of the President of the United States, or any Justice of the Supreme Court of the United States, unless the officer, employee, or justice is domiciled within the District of Columbia at any time during the taxable year.
(18) “Employer” means an employer as defined in section 3401(d) of the Internal Revenue Code of 1986.
(19) “Fiduciary” means a guardian, trustee, executor, committee, administrator, receiver, conservator, or any other person acting in any fiduciary capacity for any person.
(20) “Financial institution” means any bank or trust company incorporated or required to be incorporated and doing business under the laws of the United States, the District of Columbia, or any state, a substantial part of the business of which consists of receiving deposits and making loans and discounts or of exercising fiduciary powers similar to those permitted to national banks under authority of the Comptroller of the Currency and which is subject by law to supervision and examination by the District or by any state, territorial, or federal authority having supervision over the financial institution, including:
(A) Any savings and loan associations; and
(B) Any company, a substantial part of the business of which consists of receiving deposits and making loans and discounts or of exercising fiduciary powers similar to those permitted to national banks under authority of the Comptroller of the Currency, which is organized or created under the laws of a foreign country and which maintains an office or branch in the District.
(21) “Fiscal year” means an accounting period of 12 months ending on any day other than the last day of December and on the basis of which the taxpayer is required to report for federal income tax purposes.
(22) “Head of household” shall have the same meaning as defined in section 2(b) of the Internal Revenue Code of 1986.
(23) “Individual” means all natural persons (other than fiduciaries), whether married, domestic partners, or unmarried.
(24) “Intangible expense” means:
(A) An expense, loss, or cost for, related to, or in connection directly or indirectly with the direct or indirect acquisition, use, maintenance, management, ownership, sale, exchange, or any other disposition of intangible property, to the extent the expense, loss, or cost is allowed as a deduction or cost in determining taxable income for the taxable year under the Internal Revenue Code of 1986;
(B) A loss related to or incurred in connection directly or indirectly with factoring transactions or discounting transactions;
(C) A royalty, patent, technical, or copyright and licensing fee; or
(D) Any other similar expense or cost.
(25) “Intangible property” means patents, patent applications, trade names, trademarks, service marks, copyrights, and similar types of intangible assets.
(26) “Interest expense” means an amount directly or indirectly allowed as a deduction under section 163 of the Internal Revenue Code of 1986 for purposes of determining taxable income under the Internal Revenue Code of 1986.
(27) “Internal Revenue Code of 1954” means the Internal Revenue Code of 1954, approved April 6, 1954 (68A Stat. 3; 26 U.S.C. § 1 et seq.), as amended through May 24, 1985.
(28) “Internal Revenue Code of 1986” means the Internal Revenue Code of 1986, approved October 22, 1986 (100 Stat. 2085; 26 U.S.C. § 1 et seq.); which provisions shall apply on the same dates that they are effective for federal tax purposes.
(29) “International banking facility” or “IBF” shall have the same meaning as provided in section 204.8(a)(1) of Regulation D of the Board of Governors of the Federal Reserve System, effective December 3, 1981 (12 CFR § 204.8(a)(1)).
(30) “International banking facility extension of credit” or “IBF loan” shall have the same meaning as provided in section 204.8(a)(3) of Regulation D of the Board of Governors of the Federal Reserve System, effective December 3, 1981 (12 CFR § 204.8(a)(3)).
(31) “International banking facility time deposit” or “IBF time deposit” shall have the same meaning as provided in section 204.8(a)(2) of Regulation D of the Board of Governors of the Federal Reserve System, effective December 3, 1981 (12 CFR § 204.8(a)(2)).
(31A) Not Funded.
(32) “Net operating loss” shall have the same meaning as provided in section 172(c) of the Internal Revenue Code of 1986, subject to limitations and modifications provided in this section.
(33) “Net operating loss deduction” means the aggregate of the apportioned net operating loss carryovers to the taxable year.
(34) “Nonbusiness income” means all income other than business income.
(35) “Nonresident” means every individual other than a resident.
(36) “Ownership” in determining the ownership of stock, assets, or net profits of any person, means the constructive ownership of section 318(a) of the Internal Revenue Code of 1986 as modified by section 856(d)(5) of the Internal Revenue Code of 1986.
(37) “Partnership” means a general or limited partnership or organization of any kind that is treated as a partnership for tax purposes under the laws of the District of Columbia.
(38) “Payroll period” means a payroll period as defined in section 3401(b) of the Internal Revenue Code of 1986.
(39) “Person” means any individual, firm, partnership, general partner of a partnership, limited liability company, registered limited liability partnership, foreign limited liability partnership, association, corporation (whether or not the corporation is, or would be if doing business in the District, subject to this chapter), unincorporated business, company, syndicate, estate, trust, business trust, trustee, trustee in bankruptcy, receiver, executor, administrator, assignee, fiduciary, or organization of any kind. For purposes of combined reporting, The term “person” shall not include a Qualified High Technology Company as defined in § 47-1817.01(5)(A) .
(39A) "Qualified opportunity fund" shall have the same meaning as set forth in section 1400Z-2 of the Internal Revenue Code of 1986, approved December 22, 2017 (131 Stat. 2184; 26 U.S.C. § 1400Z-2) ("section 1400Z-2").
(39B) "Qualified opportunity zone" shall have the same meaning as set forth in section 1400Z-2.
(39C) "Qualified opportunity zone business" shall have the same meaning as set forth in section 1400Z-2.
(39D) "Qualified opportunity zone business property" shall have the same meaning as set forth in section 1400Z-2.
(40) “Related entity” means a person that under the attribution rules of section 318 of the Internal Revenue Code of 1986 is:
(A) A stockholder who is an individual, or a member of the stockholder’s family as enumerated in section 318 of the Internal Revenue Code of 1986, if the stockholder and the members of the stockholder’s family own, directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the taxpayer’s outstanding stock;
(B) A stockholder, or a stockholder’s partnership, limited liability company, estate, trust, or corporation, if the stockholder and the stockholder’s partnerships, limited liability companies, estates, trusts, and corporations own directly, indirectly, beneficially, or constructively, in the aggregate, at least 50% of the value of the taxpayer’s outstanding stock; or
(C) A corporation, or a party related to the corporation in a manner that would require an attribution of stock from the corporation to the party or from the party to the corporation under the attribution rules of section 318 of the Internal Revenue Code of 1986 (“party related to the corporation”), if the corporation or party related to the corporation owns, directly, indirectly, beneficially, or constructively, at least 50% of the value of the corporation’s outstanding stock.
(41) “Related member” means:
(A) A person that, with respect to the taxpayer is, at any time during the year, a related entity;
(B) A component member as defined in section 1563(b) of the Internal Revenue Code of 1986;
(C) A controlled group of which the taxpayer is also a component; or
(D) A person to or from whom there is attribution of stock ownership in accordance with section 1563(e) of the Internal Revenue Code of 1986.
(42) “Resident” means an individual domiciled in the District at any time during the taxable year, and every other individual who maintains a place of abode within the District for an aggregate of 183 days or more during the taxable year, whether or not the individual is domiciled in the District, excluding any elective officer of the government of the United States or any employee on the staff of an elected official in the legislative branch of the government of the United States if the employee is a bona fide resident of the state of residence of the elected officer, or any officer of the executive branch of the government whose appointment was made by the President of the United States and subject to confirmation by the Senate of the United States and whose tenure of office is at the pleasure of the President of the United States, or any Justice of the Supreme Court of the United States, unless the officer, employee, or justice is domiciled within the District at any time during the taxable year. In determining whether an individual is a resident, an individual’s absence from the District for temporary or transitory purposes shall not be regarded as changing his domicile or place of abode.
(43) “Sales” means all gross receipts of the taxpayer that are business income, as that term is defined in this section. The term “sales” does not include receipts of a taxpayer from hedging transactions and from the maturity, redemption, sales, exchange, loan, or other disposition of cash or securities.
(44) “Standard deduction” means:
(A) In the case of a return filed by a single individual or married individual filing a separate return:
(i) For taxable years beginning before January 1, 2015, the amount of $4,000 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50) for a single individual and one-half of the amount that may be taken by a single individual for a married individual filing a separate return;
(ii) For taxable years beginning after December 31, 2014, but before January 1, 2017, $5,200 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(iii) For taxable years beginning after December 31, 2016, but before January 1, 2018, $5,650 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(iv) For taxable years beginning after December 31, 2017, but before January 1, 2025, the standard deduction as prescribed in section 63(c) of the Internal Revenue Code of 1986; or
(v) For taxable years beginning after December 31, 2024, the term "standard deduction" means the sum of:
(I) The basic standard deduction as defined in paragraph (3A) of this section; and
(II) The additional standard deduction as prescribed in section 63(c)(3) of the Internal Revenue Code of 1986.
(B) In the case of a return filed by a head of household:
(i) For taxable years beginning before January 1, 2015, the amount of $4,000 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(ii) For taxable years beginning after December 31, 2014, but before January 1, 2017, $6,500 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(iii) For taxable years beginning after December 31, 2016, but before January 1, 2018, $7,800 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(iv) For taxable years beginning after December 31, 2017, but before January 1, 2025, the standard deduction as prescribed in section 63(c) of the Internal Revenue Code of 1986; or
(v) For taxable years beginning after December 31, 2024, the term "standard deduction" means the sum of:
(I) The basic standard deduction as defined in paragraph (3A) of this section; and
(II) The additional standard deduction as prescribed in section 63(c)(3) of the Internal Revenue Code of 1986.
(C) In the case of a return filed by married individuals or registered domestic partners filing a joint return, or a surviving spouse:
(i) For taxable years beginning before January 1, 2015, the amount of $4,000 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(ii) For taxable years beginning after December 31, 2014, but before January 1, 2017, $8,350 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(iii) For taxable years beginning after December 31, 2016, but before January 1, 2018, $10,275 increased annually by the cost-of-living adjustment (if the adjustment does not result in a multiple of $50, rounded to the next lowest multiple of $50);
(iv) For taxable years beginning after December 31, 2017, but before January 1, 2025, the standard deduction as prescribed in section 63(c) of the Internal Revenue Code of 1986; or
(v) For taxable years beginning after December 31, 2024, the term "standard deduction" means the sum of:
(I) The basic standard deduction as defined in paragraph (3A) of this section; and
(II) The additional standard deduction as prescribed in section 63(c)(3) of the Internal Revenue Code of 1986.
(D) In the case of an individual who is a resident, as defined in paragraph (42) of this section, for less than a full 12-month taxable year, the amounts specified in subparagraph (A), (B), or (C) of this paragraph prorated by the number of months that the individual was a resident.
(45) “State” means any state of the United States, the District of Columbia, the Commonwealth of Puerto Rico, any territory, or possession of the United States and any foreign country or political subdivision thereof.
(46) “Subpart F income” shall have the same meaning as provided in section 952 of the Internal Revenue Code of 1986.
(47) “Surviving spouse” shall have the same meaning as provided in section 2(a) of the Internal Revenue Code of 1986; except, that in applying section 2(a) of the Internal Revenue Code of 1986, the term spouse shall be deemed to include a domestic partner.
(48) “Tax” or “tax liability” includes the liability for all amounts owing by a taxpayer to the District under this chapter.
(A) “Tax haven” means a jurisdiction that:
(i) For a particular tax year in question has no, or nominal, effective tax on the relevant income and has laws or practices that prevent effective exchange of information for tax purposes with other governments regarding taxpayers benefitting from the tax regime;
(ii) Lacks transparency, which, for the purposes of this definition, means that the details of legislative, legal, or administrative provisions are not open to public scrutiny and apparent or are not consistently applied among similarly situated taxpayers;
(iii) Facilitates the establishment of foreign-owned entities without the need for a local substantive presence or prohibits these entities from having any commercial impact on the local economy;
(iv) Explicitly or implicitly excludes the jurisdiction’s resident taxpayers from taking advantage of the tax regime’s benefits or prohibits enterprises that benefit from the regime from operating in the jurisdiction’s domestic market; or
(v) Has created a tax regime that is favorable for tax avoidance, based upon an overall assessment of relevant factors, including whether the jurisdiction has a significant untaxed offshore financial or other services sector relative to its overall economy.
(B) For the purposes of this paragraph, the term “tax regime” means a set or system of rules, laws, regulations, or practices by which taxes are imposed on any person, corporation, or entity, or on any income, property, incident, indicia, or activity pursuant to governmental authority.
(B-i) [Repealed].
(50) “Taxable income” means as required by the context set forth in § 47-1807.01(2) or § 47-1808.02(1) .
(51) “Taxable year” means the calendar year or the fiscal year, whichever is the basis upon which the net income of the taxpayer is computed under this section; if no fiscal year has been established by the taxpayer, it means the calendar year. The term “taxable year” includes, in the case of a return made for a fractional part of a calendar or fiscal year under the provisions of this section or under regulations prescribed by the Chief Financial Officer, the period for which the return is made; provided, that no taxpayer shall change from a calendar year to a fiscal year or from a fiscal year to a calendar year within any taxable year without the written authorization of the Chief Financial Officer.
(52) “Taxpayer” means any person subject to the tax imposed by this chapter.
(53) “Trade or business” means the engaging in or carrying on of any trade, business, profession, vocation, or calling, or commercial activity in the District of Columbia, including activities in the District that benefit a related entity of the taxpayer, the performance of functions of a public office, and the leasing of real or personal property in the District of Columbia by any person whether or not the property is leased directly by the person or through an agent, officer, or a representative, and whether or not the person, agent, officer, or representative performs any services in connection with the property.
(54) “United States” means the United States of America and includes all of the states of the United States, the District of Columbia, and United States’ territories and possessions.
(55) “Unitary business” means a single economic enterprise that is made up either of separate parts of a single business entity or of a commonly controlled group of business entities that are sufficiently interdependent, integrated, and interrelated through their activities so as to provide synergy and mutual benefit that produces a sharing or exchange of value among them and a significant flow of value to the separate parts.
(56) “Wages” means wages as defined in section 3401(a) of the Internal Revenue Code of 1986.
(57) “Water’s-edge combined group” is comprised of all entities includible in the combined report, as determined pursuant to § 47-1810.07 .
(58) “Worldwide combined report” means the combination of the income and activities of all members of a unitary group irrespective of the country in which the corporations are incorporated or conduct business activity.