Dear Ward 5 neighbors,
I know there’s been a lot of back and forth about the DC tax drama, and I’ve heard from many of you that it is confusing to keep track of all the developments. Here’s a quick timeline of the facts and an update on where things stand (the short version: you can file your taxes!).
- Last fall, Congress passed the “One Big Beautiful Bill Act” (OBBBA), enacting 84 new tax-related provisions across federal and state/local tax codes.
- More than a dozen states—both Republican and Democrat-led—chose to “decouple” from some of those provisions in order to ensure their tax codes still worked well on the local level.
- The District also chose to decouple. More specifically, we decoupled from 13 of the provisions and kept the 71 others (the vast majority).
- In January, Congress introduced a resolution to overturn our laws and force us to adopt all 84 provisions. Of course, they didn’t do this to any of the other states or local jurisdictions that decoupled, highlighting the importance of continuing our fight for DC Statehood.
- The resolution passed the House and the Senate and was signed by the President in February.
- However, the DC Attorney General released a legal opinion last week laying out four legal arguments including that Congress acted outside of the required 30-day congressional review period stipulated in the Home Rule Act, and that the effective law for tax year 2025 is whatever was in effect as of December 31, 2025.
- This week, the District’s Chief Financial Officer sent a letter to the Mayor and Council deferring to the Attorney General’s legal opinion and affirming that tax season will proceed on schedule, with the decoupling law passed by the DC Council intact.
Neighbors might be wondering why the District decoupled in the first place. Provisions from the OBBBA like “no tax on tips” and “no tax on overtime” sound like a benefit to residents, so why not adopt those changes? The truth is, many of the provisions in the OBBBA are corporate giveaways and tax breaks for the ultra-wealthy, and it is known to be one of the largest wealth transfers to the wealthy in U.S. history. As the Institute on Taxation and Economy Policy put it, “Overall, the 2025 tax law [OBBBA] will funnel more than $1 trillion in tax cuts to the top 1 percent and multinational corporations over the next decade.” This makes provisions like “no tax on tips” little more than a dangling carrot that leads to a cliff. The carrot may look good, but disaster (specifically for low- and middle-income families) lies on the other side. Not only this, but by decoupling, the Council was able to secure major benefits for some of our most vulnerable neighbors by funding the District Child Tax Credit and expanding the Earned Income Tax Credit.
On a more personal note, I believe my faith charges me to speak up for the vulnerable and defend the rights of the poor. As Proverbs 31:8-9 says, “Speak up for those who cannot speak for themselves, for the rights of all who are destitute. Speak up and judge fairly; defend the rights of the poor and needy.” While I’m referencing Judeo-Christian Scripture, the truth is that this is a message and tenet across all major religions. I have championed the Council’s decoupling efforts not to spite Congress, not simply to secure revenue for the District, and not to just go along with my colleagues, but because it is the right thing to do.
