DC Advances Budget Cutting Child Tax Credit, Avoiding Hikes (1)

A Washington, DC, city budget bill leaves intact many of the tax changes proposed by Mayor Muriel Bowser (D), with some modifications.

The DC Council gave its initial approval on the budget proposal Monday, and is scheduled to take a final vote July 28.

The budget plan, published Sunday, repeals a program that offered a tax credit of $420 per child for up to three children. According to the budget proposal, it would have cost taxpayers about $14.6 million over the fiscal year. Bowser included the repeal in the $12 billion spending plan she proposed in late May.

The city is behind approving its fiscal 2026 budget, largely because of mandatory cuts DC had to make in the face of uncertainty from the federal government. The new federal tax law could worsen the district’s fiscal outlook if DC conforms to changes in the US tax code, the Council’s budget warns. Exempting hourly workers’ overtime pay from income tax could cost the city about $47 million in revenue, the Council said.

Additionally, the Council’s budget includes a 25% tax on the gross revenue from legalized poker and blackjack games, as proposed by Bowser’s May bill. It would also legalize commercial bingo games taxed at a flat 7.5% tax rate on gross receipts from the sale or charges collected to play.

The budget does not include any tax increases on individuals or businesses.

Though the proposal mostly followed Bowser’s tax requests, the Council is seeking to cut out the mayor’s proposal to revive the city’s Qualified High Technology Credit that would have cost about $2 million by giving tax breaks to tech companies.

Council Chair Phil Mendelson (D) wrote in a cover letter to the city’s fiscal 2026 budget that the Council will consider splitting off a nearly $1 billion proposal to renovate the historic Robert F. Kennedy Stadium site into a new home for the NFL’s Washington Commanders, which includes tax abatements, in a standalone measure to give lawmakers more time to deliberate over the details.

“The Committee remains committed to reaching a deal that brings the Commanders back to the District, and as such, maintains all Mayoral financial commitments to the team in this budget,” Mendelson wrote.