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Qualified High Tech Companies (QHTC)

DC Tech Incentives

Are you a company that delivers technology products and services? Qualified High Technology Companies (QHTC) can claim one of the most attractive incentive packages for high technology businesses in the country. These benefits include reduced corporate franchise and capital gains tax rates, as well as lowered costs to hire, train, and relocate workers.

A Qualified High Technology Company (QHTC) is a for-profit company which:

  • Leases or owns an office in the District of Columbia.
  • Derives at least 51% of its gross revenues earned in the District from one or more permitted high technology activities. Examples include website design, software development, and data processing.
  • Has 2 or more qualified employees in the District (employed for at least 35 hours per week in any of the permitted activities).
  • Is registered with the DC government as a business in DC.
  • Is not located in the DC Ballpark TIF Area. Enter your address on the map at incentives.dc.gov to ensure your location qualifies for QHTC Incentives.


QHTC benefits for every stage of your business:
Grow in DC

  • 0% corporate franchise tax for first 5 years of business in DC; afterwards, the rate is only 6%
  • Capital gains tax only 3% for qualifying investments in QHTCs (see details below)
  • New hire wage tax credit: up to $15,000 annually (for 24 months) for each qualified disadvantaged* employee
    • Up to $5,000 annually (for 24 months) for all other qualified employees
  • New hire retraining tax credit: up to $20,000 for each qualified disadvantaged employee
  • 10-year tax exemption from the date of acquisition on personal property used for operating your business

Move to DC

  • Relocation tax credit: up to $7,500 for each qualified employee that relocates its principal residence to the district
    • Up to $5,000 for all other relocated qualified employees
  • 5-year freeze on real property taxes for office improvements

Thrive In DC

  • Lifetime reduction of corporate franchise tax from 8.25% to 6%
  • Sales tax exemption on purchase of hardware, software and equipment, and on qualifying sales
  • Increased business expense deduction: up to $40,000 for depreciable assets (IRC sec. 179 expenses)


Capital Gains Tax Reduction:
For tax years beginning after December 31, 2018, the tax on a capital gain from the sale or exchange of an investment in a QHTC shall be at the rate of 3% if:

  • The investment was made after March 11, 2015;
  • The investment was held by the investor for at least 24 continuous months;
  • At the time of the investment, the stock of the QHTC was not publicly traded; and
  • The investment is in common or preferred stock of the QHTC.

*A qualified disadvantaged employee is defined as:

       a)  A DC resident and
       b)  A recipient of Temporary Assistance for Needy Families (TANF); or
       c)  A recipient of TANF in the period immediately preceding employment; or
       d)  A person released from incarceration within twenty-four months before the date of employment by a QHTC; or
       e)  An employee hired, or relocated to DC, after December 31, 2000, and for whom a QHTC is eligible to claim the Welfare to Work Tax Credit or the Work Opportunity Tax Credit under IRC  and sec. 51.

Example of Savings:


Savings are based on a technology business:

  • That is less than 5 years old with revenue of $12.5 million; taxable income of $1.25 million
  • With 20 new hires (10 qualified disadvantaged employees, 10 qualified employees) and 20 people relocated to work and live in DC
  • Furniture and equipment valued a $5 million, with $1.25 million new hardware purchases
  • Renovation of leased space costing $625,000 (with increase in property value)

How to Claim QHTC Benefits
For full details on qualifications, benefits and how to apply, visit the Office of Tax and Revenue or download the latest QHTC FR-399 booklet and tax forms.

Questions?

Additional Resources
2017 Certification Fill-in form
View or download the MyTax.DC.gov User Guide: How to Submit an online QHTC Certification Request
Creative and Open Space Modernization: Interior Renovation Tax Rebate