District of Columbia is one of the more regulated states for the trades. You need a state contractor license to take work on, and the income tax runs up to 10.75%, so both your paperwork and your tax bill are heavier here than average. Knowing the rules is the difference between a healthy margin and a nasty surprise.
Each section below points to a tool that runs your exact numbers for District of Columbia.
Tax in District of Columbia
District of Columbia has a graduated state income tax that runs up to 10.75% at the top, on top of your federal taxes. Graduated means the rate climbs as your profit does, so a good year costs proportionally more. You owe federal income tax and self-employment tax as well, and you make estimated payments to both District of Columbia and the IRS through the year.
On sales tax, District of Columbia follows the usual rule for the trades: your labor is not taxed, and you pay sales tax on your materials when you buy them rather than charging it to the customer. DC is the local government; no additional local tax.
Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for District of Columbia.
Getting paid: liens and retainage
A mechanic's lien is the tool that actually gets a District of Columbia contractor paid, and in District of Columbia you generally have to record it within 90 days of the earlier of completion or termination of the project. Miss it and you lose the lien, so the dates matter.
Enforcing it has its own clock. 180 days from recording the notice of intent to file suit - AND you must record a notice of pendency of action within 10 DAYS of filing that suit. Failing either one terminates the lien, so winning the race to sue and then forgetting the lis pendens loses it just the same (40-303.13). Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (D.C. Code 40-303.01, 40-303.05, 40-303.08, 40-303.13).
On money held back as retainage, this is our plain-English summary for District of Columbia. NOT VERIFIED. No citation on this row at all: it is carried from the June 2026 spine reconciliation and has never been read against the DC Code here. The public entry says the rate is reduced once the job is half done and records neither the trigger nor the mechanism, so it cannot tell you what you have to do to earn the reduction.
- Private work: Set by your contract; no statutory cap.
- Public work: 10%, reduced once the job is half done.
- Release (unconfirmed): At the discretion of the contracting authority.
Check the Retainage Calculator before you sign a contract that holds back more.
There is no District of Columbia retainage letter on this site, and the NOT VERIFIED line above is why. A letter that tells the party holding your money what to hand over only gets written over a row that has been read against the statute in full. The Document Hub carries the forms that do not turn on a state rule.
Do you need a license in District of Columbia?
District of Columbia requires a state contractor license to take building work on. The threshold that triggers it: Home improvement at $300 or more; General Contractor/Construction Manager endorsement required regardless of job size. Working unlicensed when your job needs a license is the expensive mistake here. The GC/CM endorsement has NO dollar trigger - 17 DCMR 3900.1 requires it of each person engaged in general contracting or construction management, whatever the job is worth. The five license CLASSES at 3901.2 are CAPS ON PROJECT VALUE, not entry thresholds, and all four capped classes use 'in excess of', so the figure itself is allowed: Class A no limit, Class B 10,000,000, Class C 5,000,000, Class D 2,000,000, Class E 500,000. A Class E holder may take a project worth exactly 500,000. The chapter has NO exemptions section - the exclusions are definitional, in 3999: a general contractor is one contracted to build on property owned, controlled or leased BY ANOTHER PERSON, so an owner building on their own land falls outside the definition rather than being exempted from it, and a licensed engineer or architect acting within their license is not a construction manager. Holding this license removes the need for a separate home improvement contractor license (3900.7). License term is two years (3901.8). The license comes from Department of Licensing and Consumer Protection (DLCP). District of Columbia accepts the NASCLA commercial exam, useful if you work across state lines.
Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.
Building codes and permits
District of Columbia adopts its building codes statewide, so the rules travel with you across the state. Editions still move, so confirm yours with the building department before you price a job.
- Homes: 2015 (published as the 2017 DC Residential Code, 12-B DCMR)
- Electrical: 2014 (published as the 2017 DC Electrical Code, 12-C DCMR)
- Energy: 2015, with ASHRAE 90.1-2013 for commercial (published as the 2017 DC Energy Conservation Code, 12-I DCMR)
- Plumbing: 2015 IPC (published as the 2017 DC Plumbing Code, 12-F DCMR)
The District names its whole package by its own year: the 2017 DC Construction Codes carry the 2015 I-Codes and the 2014 NEC, all effective 29 May 2020. Build to the 2017 DC designation, because the DCMR amendments govern wherever they conflict with the model text. There are no sub-jurisdictions, so the code applies everywhere in the District automatically and no local body may adopt or amend anything. The next cycle, built on the 2021 I-Codes, is in development with no effective date and is not expected before late 2027; the Construction Codes Coordinating Board was sunset on 11 February 2026 and the Department of Buildings now leads code development.
Source: DC Department of Buildings, DC Construction Codes (dob.dc.gov); Title 12 DCMR as promulgated by the Construction Codes Coordinating Board, published 29 May 2020 at 67 DCR 5679; Mayor's Orders 2026-021 and 2026-022. Read against that source on 2026-08-25.
Check a specific job on the permit tool.
Pay and workers' comp
The minimum wage in District of Columbia is $18.40 an hour. The DOL's own two pages disagree on DC, see below. $18.40 is shown because both the dated table and the per-state page carry it, and because understating a floor is the error that tells a worker his pay is legal when it is not. That is the floor for anyone you put on the books, and it is worth confirming against the state labor department each year because several states step their rate mid-year. Check a rate on the minimum-wage tool.
Workers' comp rates in District of Columbia are not published as a single figure; they turn on your trade's class code and your payroll. Get a realistic range on the Workers' Comp Estimator, then get a real quote.
If a client will not pay
If a client will not pay, you can sue for up to $10,000 in District of Columbia's Small Claims & Conciliation (Superior Court). That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.
The clock runs the other way too: a client generally has 3 years to sue you over the work under a written contract in District of Columbia, and there is no absolute cutoff, so your exposure turns on when a defect is found. Work out your exposure on the Warranty & Claim Deadline tool.
Common questions
How much state income tax will I pay in District of Columbia?
District of Columbia has a graduated rate up to 10.75% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.
Do I need a contractor's license in District of Columbia?
Yes. District of Columbia requires a state contractor license. The threshold: Home improvement at $300 or more; General Contractor/Construction Manager endorsement required regardless of job size. It is issued by Department of Licensing and Consumer Protection (DLCP).
What is the small claims limit in District of Columbia?
You can sue for up to $10,000 in District of Columbia's Small Claims & Conciliation (Superior Court). The filing fee is typically $5 to $45. Larger claims go to regular civil court.
How long do I have to file a mechanic's lien in District of Columbia?
Generally 90 days from the earlier of completion or termination of the project. Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.
What is the minimum wage in District of Columbia?
$18.40 an hour in District of Columbia, above the federal $7.25. Several states step their rate mid-year, so confirm it before you set a payroll.
What building code does District of Columbia use?
District of Columbia adopts statewide. Homes: 2015 (published as the 2017 DC Residential Code, 12-B DCMR). Electrical: 2014 (published as the 2017 DC Electrical Code, 12-C DCMR). Editions move, so confirm yours with the building department before you price a job.
The honest bit
These are the 2026 rules for District of Columbia as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the District of Columbia tax and licensing agencies, and your local building department) or with a professional. Where District of Columbia does something unusual, the detail is called out above rather than glossed over.
Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State
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Sources
- District of Columbia contractor licensing authority · District of Columbia contractor licensing authority. Who must hold a contractor or trade license in District of Columbia, and the licensing instrument (16 DCMR 899.1)
- D.C. Law Library · Mechanics lien notice, filing and enforcement deadlines in District of Columbia: D.C. Code 40-303.01, 40-303.05, 40-303.08, 40-303.13. Verified against this authority on 2026-08-15.
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