District of Columbia Payroll Instructions

The District of Columbia has income tax withholding. It calculates payroll withholding amounts with a step table similar to the federal withholding tax tables. Withholding tax tables changed for 2023. DC tax formulas have changed in 13 of the past 33 years.

DC State Withholding Instructions

To enter withholding information for an employee who lives in DC, follow these steps:

Open the Payroll tab on the left, and choose Employees.
Locate the employee record
Click the Payroll Setup button.
Enter the employee's marital status into the Marital Status field (see note below).
Enter the number of federal dependents into the Federal Exemptions field.
Enter the number of DC dependents into the State Exemptions field.
Enter a DC Tax Package into the Tax Package field, based on the employee’s W4 form. Choose Old W4 for pre-2020 forms. Choose New W4 Step2- if they did not check the box in step 2 of the new form. Choose Step2+ if they did check it. HINT: If you don't see DC packages in the list, you'll need to import the tax info first.
Click OK.

DC State Unemployment Tax Instructions

The District of Columbia SUTA tax is charged on the first $9,000 of wages for each employee (2023 rate, unchanged for many years). New companies pay a 2.7% starting tax rate (or the average rate paid by all employers, if that is higher). After the first year, the DC SUTA tax rate is different for each company, based on its hiring experience and the current fund balance.

To enter your SUTA tax rate into Goldenseal payroll writing software, follow these steps:

Choose Payroll Setup from the Costs menu, and choose Tax Items.
You'll see a list of Tax Items. Open the DC SUTA item HINT: If you don't see DC SUTA in the list, you'll first need to import the latest payroll tax tables.
Enter the percentage rate that you pay into the percentage field to the right of Calculation method.
If the cutoff amount has changed, enter it into the dollar field to the right of First Adjustment.

DC Marital Status

Use the following to determine the value for the Marital Status popup menu in each Employee account:

Single- single employee with one personal exemption
Married- married employee with two+ personal exemptions
Dual Income- married employee with one personal exemption
Head of House- single employee claims Head of Family status
Other- not used

Employees in Multiple States

If you have employees that are residents of Maryland and/or Virginia, you'll also need to import tax tables for those states. Assign the appropriate tax package to each employee, depending on where they live.