District of Columbia – Decreased Sales Tax, Increased Use Tax on Alcoholic Beverages

SALT Report 2932 – On August 28, 2013 Mayor Vincent Gray signed the District of Columbia’s Fiscal Year 2014 Budget Support Act of 2013. The Bill provides a reduction in the sales tax rate, an increase in the use tax rate to 10%, and creates a restaurant utilities exemption.

Sales Tax Rate

Effective October 1, 2013, the sales tax rate will decrease to 5.75% from 6%.

Sales of Alcoholic Beverages

The legislation increases the use tax rate on sales of spirituous or malt liquors, beers, and wine sold for consumption off premises to10%.  Previously, the use tax rate was set at 9%.

Restaurant Utilities Exemption

Effective August 1, 2013, sales of separately metered or sub-metered natural or artificial gas, oil, electricity, solid fuel or steam directly used in a restaurant are exempt from sales tax.

For purposes of the exemption, a “restaurant” is a retail establishment that is licensed by the District and is in the business of preparing and serving food to the public. This includes a pizzeria, delicatessen, ice cream parlor, cafeteria, take-out counter, and caterer, and banquet and food-processing areas in hotels. However, the term “restaurant” does not include beverage counters, coffee shops, and juice bars.

For Further Information

District of Columbia – Act 20-157, Laws 2013