District of Columbia Sales Tax on Services, Installation, etc District of Columbia: Sales Tax Handbook

District of Columbia:

What purchases are taxable in District of Columbia?

The taxability of various transactions (like services and shipping) can vary from state to state, as do policies on subjects such as whether excise taxes or installation fees included in the purchase price are also subject sales tax. This reference is here to help answer your questions about what is and is not subject to the District of Columbia sales tax.

Section 1: Taxability of Goods and Services

What transactions are generally subject to sales tax in District of Columbia?

In the District of Columbia, sales tax is legally required to be collected from all tangible, physical products being sold to a consumer. Several examples of exceptions to this tax are certain groceries and some types of equipment which is sold for businesses.

This means that someone in the state of Connecticut who sells children's books would be required to charge sales tax, but an individual who sells grocery products might not be required to charge sales tax.

Are services subject to sales tax in District of Columbia?

The District of Columbia does not usually collect sales tax from the vast majority of services performed. An example of taxed services would be one which manufactures or creates a product.

This means that a yoga instructor would not be required to collect sales tax, while a someone working in the creation of clothing may be required to collect sales tax.

You can find a table describing the taxability of common types of services later on this page.


Are shipping & handling subject to sales tax in District of Columbia?

The District of Columbia has very simple rules when it comes to taxes on shipping. When shipping the vast majority of items, you do need to charge sales tax in regards to the shipping charge tax on the shipping and handling. However, it must be noted that when charges are stated individual, and not in a lump sum, and the delivery of the product is done after the sale is made, then the shipping charge is not considered to be taxable.


Are drop shipments subject to sales tax in District of Columbia?

"Drop shipping" refers to the common business practice in which a vendor, often in a different state, makes a sale of a product which is shipped to the end-user by a third party supplier hired by the initial vendor. In District of Columbia, drop shipments are generally exempt from sales taxes. If the reseller in question chooses to register in the District of Columbia, the reseller is then qualified to both obtain and utilize any applicable resale certificate


Section 2: Taxability of Various Items in District of Columbia

This table shows the taxability of various goods and services in District of Columbia. If you are interested in the sales tax on vehicle sales, see the car sales tax page instead. Scroll to view the full table, and click any category for more details.

Category Exemption Status
Amazon Purchases
Products on Amazon.com TAXABLE *
General Clothing TAXABLE
Food and Meals
Catering TAXABLE *
Grocery Food EXEMPT
Leases and Rentals
Motor Vehicles TAXABLE *
Tangible Media Property TAXABLE
Manufacturing and Machinery
Machinery TAXABLE
Raw Materials EXEMPT *
Utilities & Fuel EXEMPT
Medical Goods and Services
Medical Devices EXEMPT *
Medical Services EXEMPT
Medicines EXEMPT
Newspapers and Magazines
Newspapers TAXABLE
Periodicals TAXABLE
Occasional Sales
General Occasional Sales EXEMPT
Motor Vehicles EXEMPT *
Optional Maintenance Contracts
General Optional Maintenance Contracts TAXABLE
Parts Purchased for Use in Performing Service Under Optional Maintenance Contracts TAXABLE
Pollution Control Equipment
General Pollution Control Equipment EXEMPT *
Janitorial Services TAXABLE
Transportation Services EXEMPT
Software and Digital Products
Canned Software - Delivered on Tangible Media TAXABLE
Canned Software - Downloaded TAXABLE
Custom Software - Delivered on Tangible Media TAXABLE
Custom Software - Downloaded TAXABLE
Customization of Canned Software TAXABLE
Digital Products TAXABLE
General Trade-Ins TAXABLE
Vending Machine Sales
Merchandise TAXABLE

* See notes in category taxability page for details

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Source: http://www.salestaxhandbook.com/district-of-columbia/sales-tax-taxability