America's Property Tax Advisor

D.C. Budget Raises Commercial Property Taxes


Large commercial property owners will be paying higher taxes starting October 1 under the 2019 budget approved by the D.C. Council.


The total spending plan is $14.5 billion, a 3.3% increase over the fiscal year 2018 budget. Higher commercial property taxes will fund an additional $178 million per year for the WMATA regional transit system and $30 million in dedicated funds for community arts and humanities.


Two Tiered System


The budget creates two tax rates for commercial property:




For property valued at $5 million or less, the rate is $1.65 per $100 assessed value.



For property valued at more than $5 million, the rate is $1.89 for the entire assessed value.


This means that a property worth $5 million will pay $82,500 in property tax, while a property worth one dollar more than $5 million will pay $94,500 in property tax.


The higher rates include a 3 cent per $100 valuation increase to fund WMATA and a one cent per $100 valuation for arts and humanities funding.


The D.C. spending plan provides a commercial property tax credit for small businesses with less than $2.5 million per year in gross revenue. It refunds an amount equivalent to 10% of a commercial lease up to $5,000 per year.


Other Tax Changes


Under the 2019 budget, the sales tax will increase from 5.75% to 6%, matching neighboring Maryland and Northern Virginia. D.C.'s sales tax was 6% from 2010 to 2013 when it dropped to 5.75%. The alcohol tax will increase from 9% to 10.25%. The user tax on ridesharing will jump from 1% to 6%. The hotel tax will go up slightly from 14.8% to 14.95%.


The D.C. budget is locally generated and must be sent to the U.S. Congress for review. If Congress says nothing, the budget becomes law Oct. 1.