Washington, D.C. raises sales tax rate on goods and services

TL;DR:

If you sell goods or taxable services into Washington, D.C., your compliance exposure just went up. The sales tax rate increases to 6.5% on Oct 1, 2025, and to 7% on Oct 1, 2026.

What changed

• Current rule (through Sept 30, 2025): Sales tax in D.C. is 6% on tangible personal property and most taxable services.
• New rule (effective Oct 1, 2025): Rate rises to 6.5%.
• Future rule (effective Oct 1, 2026): Rate rises again to 7%.

D.C. applies sales tax to both goods and a wide range of services, including:

• Data processing
• Information services
• Health clubs and gyms
• Landscaping
• Real property maintenance
• Car wash services
• Security monitoring services

Who this affects

• Ecommerce sellers shipping to D.C.: All taxable sales into the District are now subject to the 6.5% rate.
• Service providers: If you provide taxable services into D.C. and exceed nexus thresholds, your compliance requirements increase.
• CPAs, controllers, finance teams: Budgets and forecasts should account for both the 2025 increase and the scheduled 2026 bump to 7%.

Why this matters

• Margins shrink: A 0.5% increase seems small but compounds for high-volume sellers.
• Taxable services hit harder: Many service categories that aren’t taxable elsewhere are taxable in D.C.
• Another increase is coming: Businesses must plan ahead for the second jump to 7% in 2026.

Next steps for sellers

• Review your product and service exposure in D.C.
• Update checkout systems and POS to reflect the 6.5% rate effective Oct 1, 2025.
• For taxable services, confirm whether your offerings fall under D.C.’s definitions.
• Factor in the 2026 jump to 7% when forecasting pricing and margins.

If you use TaxCloud: TaxCloud automatically tracks and applies D.C.’s rate increases. That means your invoices and filings will update without manual changes, keeping you compliant through both the 2025 and 2026 transitions.