From WAMU 11/5/2025
D.C. lawmakers have seemingly managed to avert a budget catastrophe and fund new tax relief for families in one fell swoop.
The D.C. Council voted Tuesday to “decouple” portions of the city’s local tax code from the federal one, a move that should allow the District to collect nearly $700 million over the next four years. That’s because the city’s code largely matches the federal rates, meaning the District was set to effectively double up on the tax breaks pushed through by Republicans in Congress earlier this year.
Now, the city will no longer conform with federal changes like the bans on taxes on tips and overtime, reversing cuts that would’ve otherwise strained the District’s already-battered budget. With that extra cash in hand, lawmakers acted simultaneously to offer tax relief to low- and middle-income families.
That will come in two forms: The city will fully match the federal Earned Income Tax Credit, which lets parents earning less than $60,000 per year receive tax refunds. (The District previously only matched 85 percent of the credit.) And the council is also reviving a plan to create a new, local child tax credit offering $1,000 per child to families under certain income thresholds.
Read more: https://wamu.org/story/25/11/05/with-federal-tax-cuts-ahead-d-c-lawmakers-make-changes-to-preserve-revenue-and-fund-new-tax-credits/