States / District of Columbia
DC state income tax · checked October 14, 2026
Does District of Columbia tax tips and overtime?
For 2025, D.C. taxes tips and overtime. From 2026 through 2028, D.C. allows both federal deductions.
| District of Columbia return | Tips | Overtime |
|---|---|---|
| 2025 | Taxed | Taxed |
| 2026 | Not taxed (follows federal) | Not taxed (follows federal) |
The details
D.C. first decoupled from the tips, overtime, car loan interest, and senior deductions in late 2025, and its 2025 return requires adding them back.
The Fiscal Year 2027 Budget Support Act of 2026 replaced that with a narrower rule: the federal deductions for qualified tips, qualified overtime, personal car loan interest, and the enhanced senior deduction are allowed for tax years beginning after December 31, 2025, and not before.
The federal deductions apply either way. See who qualifies for no tax on tips, how the overtime deduction works, and where both go on Schedule 1-A.
States with the same 2026 treatment
All 50 states and D.C. · Delaware · Florida
Questions
Does District of Columbia tax tips in 2026?
For 2026, District of Columbia doesn’t tax the qualified tips you deduct on your federal return.
Does District of Columbia tax overtime in 2026?
For 2026, District of Columbia doesn’t tax the qualified overtime you deduct on your federal return.
What about my 2025 District of Columbia return?
For 2025, District of Columbia taxes tips in full. For 2025, District of Columbia taxes overtime in full.
Does the federal deduction still apply?
Yes. Whatever your state does, you can still claim the federal deductions on Schedule 1-A if you qualify: up to $25,000 of qualified tips per return and up to $12,500 of qualified overtime ($25,000 joint), phasing down above $150,000 of MAGI ($300,000 joint).