The general sales tax rate on the gross receipts from the sale of or charges for tangible personal property, digital goods, and taxable services will increase to 7.0% for periods beginning on and after October 1, 2026. Mass.gov
This is not a surprise. It's the second step of a planned two-year increase that the D.C. Council approved in 2024. The rate went from 6% to 6.5% on October 1, 2025, and it goes from 6.5% to 7% on October 1, 2026. Hands Off Sales Tax
The first increase already happened. The second one is 107 days away.
If you sell anything into Washington D.C. — physical goods, software, digital content, taxable services — your rate is going up in October. Here's everything you need to know before that happens.
D.C.'s general sales tax rate is one of the broadest in the country. Unlike most states, which have long lists of exemptions and special categories, D.C. applies its general rate to an unusually wide range of goods and services.
The rate applies to the gross receipts from the sale of or charges for tangible personal property, digital goods, and taxable services. Mass.gov
In practical terms, that covers:
Certain categories such as restaurant meals, hotel stays, and parking are taxed at higher special rates — those don't change with the general rate increase. Numeral
The items that remain exempt — unprepared food, prescription drugs, medical devices, and sales to qualifying exempt organizations — stay exempt regardless of the rate change.
The story behind this rate increase is worth understanding — because it explains why the October 1 date is firm and why no further delay is expected.
D.C.'s Budget Support Act of 2024 originally scheduled the rate increase in a single jump from 6% to 7% on October 1, 2025. But the D.C. Council later passed the Sales Tax Increase Delay Amendment Act of 2025 — which split the increase into two steps and pushed the full 7% rate back by one year.
The general sales tax rate remained 6.0% through September 30, 2026 — then increases to 7.0% for periods beginning on and after October 1, 2026. Madrasaccountancy
The delay was a one-time concession to give businesses more time to prepare. There is no further delay legislation pending. October 1 is the date.
One of D.C.'s compliance advantages — and it has few of them — is its simplicity.
Washington D.C. applies a uniform rate with no additional county, city, or special district taxes. This means businesses charge the same rate regardless of where the customer is located within the district. Because there are no local taxes, Washington D.C. is one of the simplest jurisdictions for sales tax compliance — you do not need to calculate multiple local rates or manage layered jurisdiction rules. Avalara
After October 1, the complete D.C. rate picture looks like this:
The general rate increase affects the first category only — the others are set by separate legislation and remain unchanged.
This is the detail that catches the most out-of-state sellers off guard — especially software companies and digital product businesses.
The District of Columbia treats SaaS, digital goods, and cloud software as taxable services. SaaS — both B2B and B2C — is taxed at the standard rate. Digital downloads and media, including e-books, streaming, and apps, are also taxable. Sales Tax Calculator
Official D.C. Office of Tax and Revenue guidance confirms that digital applications and software — whether canned, prepackaged, or customized — are taxable as data processing services. Sales Tax Calculator
That means if you sell a SaaS subscription to a D.C.-based business or consumer, you're collecting 6.5% right now and you'll be collecting 7% starting October 1. The fact that your customer is a business — not a consumer — doesn't change anything. D.C. taxes B2B SaaS the same as B2C SaaS.
If you've been assuming your software sales into D.C. aren't taxable — or that B2B transactions are exempt — that assumption is wrong and likely has been for years.
Before you can worry about collecting the right rate, you need to know whether you have an obligation to collect at all.
If you have physical nexus in Washington D.C., or establish economic nexus by having $100,000 or more in gross sales or 200 or more transactions with D.C. residents, you must register and collect the correct tax. Mass.gov
The $100,000 or 200-transaction threshold is the same dual-trigger structure that most states use — and both triggers are still in place in D.C. unlike states like Illinois that have eliminated the transaction threshold. Cross either one and you have a collection obligation.
For remote sellers of SaaS, digital goods, or taxable services — this is where exposure quietly accumulates. A software company selling subscriptions to D.C.-based businesses may cross the $100,000 threshold without ever tracking it, assume their sales are exempt because they're B2B, and end up with years of uncollected sales tax on the books.
The October 1 rate increase is a good trigger to audit whether you have D.C. nexus and whether you've been collecting correctly.
If you sell through certain online platforms — including Amazon, eBay, or Etsy but not Shopify — those platforms are considered marketplace facilitators. Washington D.C. law requires marketplace facilitators to collect and remit tax on your behalf. Mass.gov
But not every platform qualifies as a marketplace facilitator under D.C.'s rules. If you sell through a platform that doesn't meet the definition — or through your own website alongside a qualifying platform — your direct sales are your own compliance obligation.
The October 1 rate change will be handled automatically by qualifying marketplace facilitators for transactions they process. But your direct sales, your own website transactions, and any platform that doesn't qualify as a facilitator under D.C. rules — those are your responsibility to update.
The general rate increase isn't the only D.C. tax change relevant to businesses in 2026.
The Hotel Surtax Amendment Act of 2025 extended the temporary increase in the sales and use tax rate on hotel rooms, lodgings, and accommodations from 14.95% to 15.95% through September 30, 2027. Madrasaccountancy
That means hotels, short-term rental operators, and accommodation platforms serving D.C. customers are operating under a 15.95% rate — not the standard general rate — through at least September 2027. The rate was initially increased in 2022 and has now been extended twice.
If you operate lodging in D.C. or book accommodations for clients in D.C., the 15.95% rate applies regardless of what happens to the general rate in October.
The October 1 effective date is 107 days away. That sounds like plenty of time — but given how the compliance work actually flows, starting now is the right call.
1. Confirm your D.C. registration status. If you sell taxable goods or services into D.C. and meet the nexus threshold, verify you're registered with the D.C. Office of Tax and Revenue through MyTax.DC.gov. If you're not registered and should be, this is the time to fix it — before the rate change adds a new layer of liability on top of existing exposure.
2. Audit your product and service taxability. D.C.'s taxable service list is broad and includes categories that many sellers assume are exempt. Review every product and service you sell into D.C. against the OTR's taxable and non-taxable services list. Pay particular attention to SaaS, digital goods, data processing services, and bundled offerings.
3. Contact your tax software vendor. Ask your vendor specifically when they will push the updated D.C. rate for October 1. Most major platforms update automatically — but verify rather than assume, and get a timeline in writing.
4. Update any manually managed rate tables. If you manage D.C. rates in a spreadsheet, accounting system, or custom billing platform, schedule the rate update for October 1 now — not September 30 at midnight.
5. Review your filing schedule. D.C. sales tax returns are due by the 20th of the following month — filed and remitted through MyTax.DC.gov. Your October returns — covering October 1-31 at the new 7% rate — will be due November 20. Make sure your systems are capturing the rate correctly from the first day of October. Mass.gov
6. Consider a historical compliance review. If you sell SaaS or digital goods to D.C. customers and haven't been collecting sales tax, the October rate change is a natural moment to address that exposure. Voluntary disclosure with the D.C. OTR typically results in a limited lookback period and reduced or eliminated penalties — far less costly than a future audit.
Washington D.C. moving to 7% on tangible goods, digital products, and SaaS is a microcosm of what's happening across the country.
States and jurisdictions are expanding what they tax and raising the rates they charge. Digital goods that were tax-free a decade ago are now taxable in most jurisdictions. SaaS that was in a gray area five years ago now has clear guidance in most states — and it's almost always taxable. Services that were exclusively B2B and assumed to be exempt are increasingly being pulled into the taxable column.
D.C.'s trajectory — 6% to 6.5% to 7% over two years, with a broad taxable base that already includes digital goods and SaaS — is where a growing number of states are heading. The compliance lesson is the same everywhere: the rate you're collecting today may not be the rate you're required to collect in October. And the products you're treating as exempt may not be exempt where your customers are located.
Selling into Washington D.C. and want to make sure your rate is updating correctly on October 1 — or concerned you may have historical SaaS or digital goods exposure that needs to be addressed before the new rate kicks in? Book a free consultation with our team at sales.tax. We'll review your D.C. compliance setup, confirm your registration status, and help you get ahead of October 1 before it becomes a problem.