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Washington, D.C. repeals extra parking tax, increases lodging tax

  • Aug 1, 2017 | Gail Cole

 The parking tax in Washington, D.C. will not increase October 1 as planned.

Updated 10.13.17

Parking taxes in the District of Columbia will not increase on October 1, 2017, as expected. Lodging taxes in D.C., however, will increase. Both parking and lodging tax rates are impacted by the Fiscal Year 2018 Budget Support Emergency Act of 2017, recently enacted by the Council of the District of Columbia.

Parking tax rate holds steady at 18 percent

It was determined in 2015 that the District’s parking tax rate would jump from 18 percent to 22 percent on Oct. 1 of this year. Mayor Muriel Bowser insisted the higher rate was needed to subsidize public transit in the region and pointed out the tax is paid primarily by commuters, not D.C. residents. Nonetheless, the idea was not universally embraced: Many were concerned parking operators would absorb the tax rather than pass it on to customers, to keep their prices down.

The Parking Sales Tax Clarification Emergency Amendment Act of 2017 section of the FY 2018 Budget Support Emergency Act strikes the rate increase.

Lodging tax rate to increase

Under the Hospitality Tax Dedication section of the Act, a 0.3 percent tax on gross receipts for transient lodgings or accommodations is imposed on “the gross receipts from the sale of or charges for any room or rooms, lodgings, or accommodations furnished to a transient by any hotel, inn, tourist camp, tourist cabin, or any other place in which rooms, lodgings, or accommodations are regularly furnished to transients.” This new 0.3 percent tax is in addition to the existing 14.5 percent tax on hotels and transient accommodations as of Oct. 1, 2017.

In 2015, the D.C. Superior Court determined and the D.C. Court of Appeals affirmed that online travel companies are “vendors liable for the District sales tax.” For accommodations arranged by a room remarketer such as Expedia.com or Hotels.com, the 0.3 percent tax applies to “the net charges and additional charges received by the room remarketer.”

Tax revenue generated by this additional lodgings tax is to be dedicated to the Washington Convention and Sports Authority and used to promote the District as a destination.

The FY 2018 Budget Support Emergency Act of 2017 takes effect July 20, 2017. Read the act here.

Learn more about sales tax rates in Washington, D.C.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.