Updated: June 28, 2024
Running payroll can be a hassle no matter where you do it. That’s why we created a simple Washington D.C. payroll calculator that will do all the work for you. Just input your employees’ W-4 and wage information, and our calculator will process each employee’s gross pay, deductions, and net pay after D.C.’s state and federal payroll taxes.
Federal payroll taxes for District of Columbia employers
Before we get into the District of Columbia’s payroll taxes, let’s make sure you have all the relevant information you need to get those federal taxes paid.
To start, add commissions, bonuses, and tips to calculate your employees’ gross wages, regardless of how they are paid — hourly or salary.
- For employees paid hourly, multiply their hours worked by the pay rate.
- For employees who are paid a salary, divide their annual salary by the number of pay periods that year.
Then, deduct any pre-tax withholdings from their gross pay, such as 401(k)s, HSA contributions, or Flexible Spending Accounts that allow your employees to reduce their taxable income.
Federal Income Tax can range between zero and 37%, depending on how much net income an employee receives. You can find more detailed information about federal withholdings through the IRS.
FICA taxes are made up of two components — Social Security Tax and Medicare Tax. Social Security Tax is equal to 6.2% of your employee’s taxable wages up to an annual total of $168,600. Medicare Tax is 1.45% of each employee’s taxable wages until they reach $200,000. As an employer, you are responsible for matching the same amount each employee pays in Social Security and Medicare Taxes.
Although Social Security Taxes are not applied to any amount higher than $168,600 for each employee, the same is not true for Medicare Tax. After the $200,000 threshold is met for Medicare Tax, your employees are responsible for an additional 0.9% on top of the 1.45% they already owe. Therefore, gross wages above $200,000 are taxed 2.35% with no wage limits for the employee, but as the employer, you are only responsible for matching the original 1.45% on any wages above $200,000.
While you may get the upper hand in Medicare Taxes, that doesn’t quite apply to FUTA taxes (Federal Unemployment Taxes), which you are responsible for as an employer, but not as an employee. In other words, these taxes won’t be withheld from your employees’ paychecks. You, on the other hand, are responsible for paying 6% of the first $7,000 of each employee’s taxable income to FUTA taxes.
However, if you’re paying your FUTA taxes in full and on time, you could be eligible for a tax credit of up to 5.4%. Watch this informative video from the IRS to learn more about how you can earn up to 90% of these taxes back.
Last but not least, make sure to deduct any of your employee’s post-tax withholdings. It’s likely that these won’t be applicable to most of your employees, but could include things like court-ordered wage garnishments or child support.
District of Columbia payroll taxes
Now, let’s take a deeper dive into some D.C.-specific taxes. Washington D.C. has 6 marginal tax brackets, with rates ranging between 4% and 10.75%. You can find out where you fit in through D.C.’s Office of Tax and Revenue.
Unemployment insurance in DC (SUI)
Even though D.C. isn’t technically a state, unfortunately, you’re still responsible for paying State Unemployment Insurance (SUI).
The unemployment wage base for the District of Columbia is $9,000 for 2024. State Unemployment Insurance ranges from 1.9% to 7.4% and is 2.7% for a new employer. Their employer handbook may be helpful too.
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Did you know that almost all employers in the District of Columbia need to have a workers’ compensation policy? Learn more about the requirements in our employer’s guide to Washington D.C. workers’ compensation insurance.
Cut those paychecks
Now that you have state and federal taxes accounted for, you’re ready to spread the wealth and write those checks. Make sure you take into consideration your portion of FICA and FUTA taxes, especially if you want to qualify for a FUTA tax credit. These federal tax filings are due each quarter.
In addition to paying payroll taxes, as an employer, you must submit the IRS Form 941 each quarter. However, while FUTA taxes are due every quarter, you only need to fill out the IRS Form 940 once at the end of the year. You also have the option of paying on an ongoing basis through the EFTPS payment system.
Here’s some more detailed information about tax filing due dates for your reference.
Do you have employees nearby too? These might be helpful.
Additional DC payroll tax resources:
Here are a few more resources we think you’ll find helpful:
Department of Employment Services | New Business Registration | Employer Self Service Portal | Tax Rate Questions
Office of Tax and Revenue | File and Pay Taxes Online
These rates are based on local legislation and can change at any time. Always consult a tax professional if you are unsure about your obligations.
More payroll calculators for District of Columbia employers
Employers in the District of Columbia can quickly figure out their employees’ gross pay, net pay, and deductions by using the payroll calculator at the top of this page. But every now and then, a company needs to do a little more math before they can cut paychecks. For example, do you operate a business where employees get tips from customers? Remember that you are responsible for withholding taxes from your employees’ paychecks based on the tips they receive. Additionally, if an employee leaves for another employer, you’ll need to calculate their final pay. So, if you need a little more help with the number-crunching, check out some of the calculators below.