District of Columbia: Sales Tax Handbook
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.
Contents1.) Taxability of Goods and Services
- General District of Columbia taxability guidelines
- Are services subject to sales tax?
- Is shipping & handling subject to sales tax?
- Are drop shipped items taxable?
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.Top
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.Top
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.
|Products on Amazon.com||TAXABLE *|
|Food and Meals|
|Leases and Rentals|
|Motor Vehicles||TAXABLE *|
|Tangible Media Property||TAXABLE|
|Manufacturing and Machinery|
|Raw Materials||EXEMPT *|
|Utilities & Fuel||EXEMPT|
|Medical Goods and Services|
|Medical Devices||EXEMPT *|
|Newspapers and Magazines|
|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 *|
|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|
|Vending Machine Sales|
* See notes in category taxability page for details
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