Does District of ColumbiaTax Tips & Overtime After the OBBBA?
District of Columbia has not conformed to the federal deductionfor the federal OBBBA tip and overtime deductions. Here's what that means for your paycheck.
Compiled by Sharon Ben-Moshe · Conformity data verified August 1, 2026
Quick answer
District of Columbia has a state income tax (about 8.95% used for estimates) and currently has not conformed to the federal deduction. That means you may still owe state income tax on your tips and overtime even though your federal tax is reduced.
Tips deduction
Not conformed
Overtime deduction
Not conformed
Details for District of Columbia
DC decoupled from the federal tips and overtime deductions via emergency and temporary legislation, requiring an add-back on DC Schedule I. Congress passed a disapproval resolution (H.J. Res. 142, signed Feb. 18, 2026) nullifying the temporary decoupling act; the DC Attorney General maintains the decoupling remains valid and OTR is still requiring the add-back, but the legal status is contested as of mid-2026.
Last verified August 1, 2026.
How OBBBA tips & overtime work in District of Columbia
The OBBBA is a federal deduction: eligible workers can deduct up to $25,000 of tips and $12,500 of overtime premium ($25,000 if married filing jointly) from federal taxable income through 2028. Whether District of Columbia follows suit depends on state conformity. FICA (Social Security and Medicare) applies everywhere. Learn more about the tip deduction and the overtime deduction.
How this is sourced: District of Columbia's conformity status is tracked against state legislation and primary IRS guidance, and re-verified as the law changes. See our methodology and sources.