CPA for Washington DC Metro Clients: Remote Tax, Payroll and Accounting

Our firm is based in Naperville, Illinois, and we serve clients across the Washington, DC area remotely; we have no office in DC, Maryland or Virginia. A single commute in this region can cross two or three tax jurisdictions, and each one has its own rules for businesses. This page covers what is distinctive in the District, Maryland and Northern Virginia.

District of Columbia: franchise tax for unincorporated businesses

DC's Unincorporated Business Franchise Tax, like its corporate franchise tax, is 8.25% for tax years 2018 through 2025. It applies to unincorporated businesses with more than $12,000 of DC gross receipts. A business can deduct a 30% salary allowance for owners and a $5,000 exemption, and the minimum tax is $250 if DC gross receipts are $1 million or less and $1,000 above that. A business is exempt if more than 80% of its gross income comes from personal services and capital is not a material income-producing factor, so some consultants and professional practices may be excluded while others are not. Whether you qualify depends on the facts, and a return may still be needed to claim the exemption.

DC's general sales tax rate stays at 6% through September 30, 2027, after a planned increase to 7% was postponed. DC also runs a Paid Family Leave program for private-sector employees, funded by an employer-paid tax that payroll must handle.

Maryland: local income tax and IT services

Maryland residents pay county or Baltimore City income tax on top of the state tax, and the Comptroller's 2025 tax updates describe changes to deductions and rates that came with the 2025 budget law. Beginning in July 2025, some Maryland businesses must collect a 3% sales tax on certain IT services, which matters to consultants and software firms. Maryland residents who work in DC or Virginia should confirm where wages are taxed and which state gives the credit.

Virginia: reciprocity and BPOL

Virginia has reciprocity with DC, Kentucky, Maryland, Pennsylvania and West Virginia. A nonresident employee from one of those jurisdictions who qualifies files Form VA-4 with the employer to avoid Virginia withholding, and must certify each year. For businesses, Virginia cities and counties may levy business, professional and occupational license taxes (BPOL). State law caps rates by classification, ordinances vary by locality, and the tax is generally measured on gross receipts, so a firm that moves from Arlington to Fairfax can face a different bill. Virginia also allows an elective pass-through entity tax, filed with Form 502PTET.

The community

The Washington metro area has about 206,000 residents who identify as Asian Indian alone or in combination (roughly 3.3%). Loudoun County, Virginia is about 11.3% and Fairfax County about 5.0% (American Community Survey, 2020 to 2024). We support families and employers with the US-India tax treaty, India account reporting and multi-state payroll.

How we can help

We prepare federal and multi-state returns, review whether DC franchise tax or Virginia BPOL applies to your business, and run payroll for employees in several jurisdictions. See our District of Columbia, Maryland and Virginia pages, plus our multi-state tax service. Talk with a qualified professional about your own situation.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.