In a rare rebuke, Congress has voted to block D.C. from opting out of President Donald Trump’s federal tax cuts, an action that Republicans celebrated as a way to put more money back in Washingtonians’ pockets but that city officials warned would cause major complications for tax season and dent anticipated revenue by hundreds of millions.
The action also blocks funding for a local child tax credit and expanded earned-income tax credit, which researchers expected to benefit about 78,000 children in the city.
Republicans in Congress have repeatedly sought to intervene in D.C. policy matters, but successful disapproval resolutions are rare: Thursday’s marks just the fifth time in the city’s half-century of home rule that Congress has disapproved a D.C. policy — and the first time it has blocked a provision intended to raise revenue, putting in stark focus once again the city’s contentious relationship with the federal government.
Trump is expected to sign the disapproval resolution into law; it passed by a vote of 49-47 and was not subject to the Senate filibuster.
Just before the vote, D.C. Council Chairman Phil Mendelson (D) posted a notice on the city’s legislative website, declaring that the bill that Congress sought to reject, the D.C. Income and Franchise Tax Conformity and Revision Temporary Amendment Act, had become law. The notice said Congress’s 30-day legislative review period that it has to disapprove D.C. laws under the Home Rule Act had expired Wednesday. Congress and the D.C. Council have tended to count the 30 days differently, a timing disagreement that has not been litigated before.
D.C. officials did not immediately provide details about whether this meant they would challenge the disapproval in some way. Mendelson said he was conferring with D.C. Mayor Muriel E. Bowser (D). A spokesman for the D.C. attorney general declined to comment.
D.C. is expected to lose roughly $600 million in revenue through 2029 as a result of the disapproval — though Sen. Rick Scott, who sponsored the measure, argued it would allow D.C. residents to “keep more of their hard earned money” rather than put it in city coffers.
“The D.C. Council decided to benefit from these people instead of helping them. They decided they deserve these people’s money more than the people do,” said Scott (R-Florida). “This isn’t right.”
The disapproval resolution rejects D.C. Council legislation passed in November that divorced the city’s local tax code from Trump’s One Big Beautiful Bill and a portion of its tax exemptions, including no tax on tips, loan interest, and other deductions for seniors and businesses. The measure had no impact on federal tax returns. Coming in the middle of tax season, the disapproval means individuals and business owners who already filed their D.C. taxes may have to redo them to claim the benefits — and the city’s chief financial officer had warned that could require the city to suspend tax filings until officials can make major adjustments.
D.C.’s allies, Democratic senators from neighboring Virginia and Maryland, came to the city’s defense on the Senate floor Wednesday, arguing the disapproval resolution trampled on local democracy, reversed efforts to address child poverty and created unnecessary bureaucratic and financial headaches.
“Why would this Congress arbitrarily just blow a big budget hole in the District’s budget?” questioned Sen. Mark R. Warner (D-Virginia). “The truth is, this city has already been under unrelenting assault by this administration. The amount of bureaucracy in terms of refiling taxes puts another burden as well.”
D.C. lawmakers decoupled the local tax code from Trump’s tax bill to boost anticipated city revenue during a time of economic strain. On Tuesday, Mayor Muriel E. Bowser (D) warned lawmakers of a bleak budget seasonahead, in which the city would have to find $1.1 billion more in revenue than is available to keep programs and services operating at the same levels as today.
D.C. joined numerous states in opting out of Trump’s tax cuts. But as a federal district, D.C. is the only jurisdiction in the country in which Congress has the constitutional power to overturn local laws, a power Republicans have increasingly sought to leverage over the past three years.
Since the advent of the city’s limited home rule in 1973, three of the five successful disapproval resolution votes have happened since 2023, including ones that blocked a major criminal code revision and a police reform package, though President Joe Biden vetoed the latter.
As part of the November vote to decouple, D.C. lawmakers also voted to use a portion of the $600 million in boosted revenue, about $239 million, to expand the earned-income tax credit for working families and fund a new local child tax credit — a policy that researchers expected could substantially reduce child poverty. If allowed to move forward, it would make D.C. the first city in the nationto offer the child tax credit with local dollars.
The disapproval resolution means the local child tax credit will be undone.
“It is going to hurt kids in the District of Columbia,” said Sen. Chris Van Hollen (D-Maryland), “and it is going to do to the people of the District of Columbia what we would never do to any of our own state legislators, which is to decide we’re going to somehow throw out their state’s tax code and substitute our own judgment instead.”
D.C. Chief Financial Officer Glen Lee warned that changing the tax code in the middle of tax filing season would mean the city would have to suspend tax filing potentially for months to make adjustments, incurring millions in expenses and having to update forms and guidance to third-party tax services such as H&R Block and TurboTax. Delayed tax collections could also impact the District’s cash flow and cause more financial headaches, Lee warned.
Eric Balliet, a spokesman for Lee, said in a statement Thursday that his office “understands that the DC Attorney General is reviewing the legal effect of today’s Senate vote to disapprove recent District tax legislation,” but that tax filing season remained open.
Bowser had issued a plea to the Senate on Monday not to “disrupt tax filing season,” saying that regardless of policy disagreements between Congress and the D.C. Council, the city’s residents should not have to deal with the major administrative burdens that changing tax rules midstream would create.
“I just can’t even imagine what it’s like to tell thousands of tax filers, ‘Oh, I know you filed, you did what you were supposed to do, but oops, can you do it again?’” Bowser said during an unrelated news conference. “The best way to keep people compliant with their tax filings and payments is to keep it simple and not disrupt it.”
Bowser did not sign the decoupling legislation late last year. She said Monday that she believed the tax maneuvers would have been better handled as part of the city budget. The council had passed the measure on an emergency and temporary basis without a public hearing — an approach that drew criticism at the time given the large tax and policy decisions involved.
“Having said that, the council passed it. The Congress should respect it,” Bowser said. “Here’s the bottom line: It’s very practical. It’s not political. It’s not ideological.”
D.C. Council members argued that the child tax credit — which would have offered up to $1,000 per child depending on income — was more beneficial to working families than the tax deductions in Trump’s bill.
Erica Williams, executive director of the left-leaning DC Fiscal Policy Institute, said last week that Congress would force the District to “backtrack on addressing child poverty.” Together with the expanded earned-income tax credit, the child credit would reduce child poverty by 20 percent and would benefit about 78,000 children, the organization found in a forthcoming analysis conducted jointly with Columbia University.
Jared Walczak, a senior fellow at the Tax Foundation, said he would have liked to see both local and federal lawmakers take a more thoughtful approach to weighing the costs and benefits of the tax policies before hastily moving the legislation or the disapproval. The council, he said, had a valid case to make that the child tax credit could help more families in an impactful way versus some of the tax deductions in the One Big Beautiful Bill, noting that many of them, such as no tax on tips or on auto loan interest, have limited reach.
“The goal of a tax credit is not necessarily to grow the economy as fast as you can — it’s to provide a benefit to families with children, and that’s worth something to society,” he said. “When you evaluate all the different provisions and look at the deductions for tips, overtime pay, auto loan interest — they’re poorly targeted. They’re temporary. An argument for benefits for children over those has a lot of appeal.”
On the other hand, he said, D.C. would have put itself at an “extreme disadvantage” compared with other states by opting out of research and experimentation deductions that benefit businesses, making the city an outlier in a way that could be costly for the D.C. economy.
Still, leaders in the D.C. business community, including at the Federal City Council and Greater Washington Board of Trade, sent a letter to Congress strongly opposing the disapproval resolution, describing potential consequences of tax season chaos. “Changes at this stage in the process would create fiscal instability and uncertainty, impeding the District’s ability to attract investment,” the letter said.
The disapproval resolution’s exact effects on D.C. tax filers are still coming into focus. Officials in the CFO’s office are working on developing detailed guidance, a spokesman said.
Jenny Gathright contributed to this report.
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