Supermarket Tax Incentives
Through the Supermarket Tax Exemption Act of 2000, the District waives certain taxes and fees to grocery stores that locate in specific neighborhoods. The incentive encourages development and investment in areas lacking access to groceries and fresh food.
Qualifying supermarkets may be eligible to receive one or more of the following benefits for up to 10 years after development or renovation:
- Real property tax exemption
- Business license fee exemption
- Personal property tax exemption
- Sales and use tax exemption on building materials necessary for construction (need to contact DMPED prior to construction to receive this benefit)
New eligibility requirements for as of August 27, 2021:
- Be located in an eligible area (see eligible area map)
- Licensed by DCRA as a grocery store
- Offer for sale at least 6 of the following categories of food or beverages:
- Fresh fruits and vegetables
- Fresh and uncooked meats, poultry, and seafood
- Dairy products
- Canned foods
- Frozen foods
- Dry groceries and baked goods
- Non-alcoholic beverages
- Dedicate a certain amount of square footage of selling area* to the sale of the foods products listed above, including a minimum of either:
- 50 percent of the store's total square footage, or
- 6,000 square feet.
- Dedicate at least 5 percent of the selling area to each of the food categories.
*In order for the square footage to be considered part of the selling area, it must be open to the public and may not include storage, preparation areas or restrooms.
If your grocery store will meet these eligibility requirements, we encourage you to reach out to DMPED at [email protected] as soon as possible to begin the conversation about certification.
To apply for certification, you will need to provide the following documents:
- Basic Business License with the declared use of “Public Health: Retail Food Establishment – Grocery Store”
- Store inspection by the DC Office of Tax and Revenue
- Certificate of Occupancy with use declared as a grocery store
- Tax Certification Affidavit and Certificate of Clean Hands from the DC Office of Tax and Revenue (request through MyTax.DC.gov)
- Proof of ownership or leasehold interest
- If owner:
- A copy of the recorded deed, or real property assessment records from the DC Office of Tax and Revenue indicating the Eligible Applicant as the property owner
- If tenant:
- Copy of the lease
- Satisfactory proof that the owner of the real property leases the land or structure of the supermarket at a fair market rent reduced by the amount of the real property tax exemption; this proof should be provided via a statement from the applicant that directs DMPED to the applicable section of the lease that outlines the pass-through of the tax exemption
- Statement from the property owner asserting support of the application to receive supermarket tax incentives
- If owner:
- A copy of an operating First Source Employment Agreement between the Government of the District of Columbia and the supermarket for the duration of the benefits, as well as satisfactory proof that the "development" requirement of DC Official Code § 47-3801(1) has been met:
- The Eligible Applicant must provide evidence, such as copies of contracts for construction or renovation, that the applicant has or will build a new building, or make an investment of 50% or more of the adjusted basis of an existing building, as calculated for District income tax purposes, which should be proven by (a) establishing the adjusted basis for the building via tax returns or certified accounting documents and (b) establishing the cost of the rehabilitation via construction contract(s) and/or invoices.
- If the applicant utilized the sales and use tax exemption on the purchase of building materials related to the development of the supermarket, then the applicant must provide detailed information regarding type and cost of building materials purchased using the exemption, including receipts.
- A statement of the current and proposed future use of the real property, indicating the types of activities carried on by the Eligible Applicant during the past twelve (12) months, and the extent to which such activities were carried on within the District of Columbia. If the Eligible Applicant did not operate for the full year, the Eligible Applicant must explain what it anticipates will be such activities for the current year.
New Application Requirements as of August 27, 2021:
- Inventory documentation OR license from ABRA as full-service grocery store
- Authorization from the U.S. Food and Nutrition Service that the store can accept Supplemental Nutrition Assistance Program("SNAP") benefits as payment
- Application to DC Health for approval to accept DC WIC benefits as payment at the qualified supermarket
- Commitment to conduct community listening sessions on the store's product offerings and operations at least once every 2 years
For inquiries, questions, or to begin the qualification process, email [email protected].
To see if you business is located in an eligible area, enter your address on the map at incentives.dc.gov.
Link to supermarket tax incentive law in DC Code
Food Policy Initiatives
For more information on other food policy initiatives within the District of Columbia, visit the Office of Planning's Food Policy Page and visit the Sustainable DC Plan website.