DC Tech Incentives

Are you a company that delivers technology products and services? Qualified High Technology Companies (QHTC) can claim tax benefits to support their growth in the District. These benefits include a reduced capital gains tax rate and lowered costs to hire and train 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 10 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 include:

• Reduced capital gains tax rate: 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
  º Up to $3,000 annually (for 24 months) for all other qualified employees**
• New hire retraining tax credit: up to $10,000 for each qualified disadvantaged employee
• 5-year freeze on real property taxes for office improvements

Capital Gains Tax Reduction:

For the tax year beginning after December 31, 2024,  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:

1.  A DC resident and
2.  A recipient of Temporary Assistance for Needy Families (TANF); or
3.  A recipient of TANF in the period immediately preceding employment; or
4.  A person released from incarceration within twenty-four months before the date of employment by a QHTC; or
5.  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 sec. 51.

**A qualified employee means a person who is employed in the District by a Qualified High Technology Company.

How to Claim QHTC Benefits
Existing and new taxpayers seeking QHTC-related benefits will be required to complete an online application annually to fulfill the self-certification requirement via MyTax.DC.gov. The annual self-certification process will replace the existing requirement of filing individual QHTC certifications with tax returns.

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?

• Email [email protected]
• Call OTR Customer Service Center at (202) 727-4829

Additional Resources
View or download the MyTax.DC.gov User Guide: How to Submit an online QHTC Certification Request

QHTC Tax Changes To Take Effect October 1, 2020