There’s a battle over local taxes underway in Washington – between its city council and the U.S. Congress – with repercussions that could impact neighboring Maryland.
Now, U.S. senators Angela Alsobrooks and Chris Van Hollen, D-Md., are weighing in.
“The fallout would not only impact businesses in D.C., but also spread to businesses in surrounding states like mine,” Alsobrooks said.
“This is a really embarrassing moment for the United States Senate. It’s a gross, gratuitous assault on the people of the District of Columbia,” said Van Hollen, brandishing an I-1040 federal tax form on the Senate floor – the same form D.C. residents will fill out this upcoming tax season.
It began with the passage of Trump’s One Big Beautiful Bill Act, which included a slew of new deductions on things like tips and overtime pay. D.C. responded by passing a measure separating local taxes from the deductions, a move that several states also took to sidestep major tax revenue losses.
But unlike those states, D.C. law is subject to congressional review under the D.C. Home Rule Act of 1973. It’s an authority Congress rarely decides to use, but the Senate voted Thursday to pass a joint resolution rejecting the D.C. measure.
If President Trump signs the resolution into law, it will force D.C. to allow the deductions on local taxes. Alsobrooks said the move could cost the city $600 million in tax revenues.
Rep. Brandon Gill (R-Fl.), who introduced the resolution in the House, said its passage would provide “historic tax relief” for D.C. residents. House Speaker Mike Johnson said House Republicans would support Rep. Gill’s measure, criticizing the D.C. legislation for taking money out of locals’ pockets.
“If this act were to become local law, D.C. residents would be prevented from claiming no tax on tips, no tax on overtime, increased standard deduction and so much more,” said Speaker Johnson. “It’s just wrong. There’s an estimated 17,000 tipped workers here in the nation’s capital, and the D.C. City Council is attempting to prevent them from enjoying this historic tax benefit.”
The entirety of the Maryland congressional delegation – with the exception of its sole Republican, Rep. Andy Harris – voted against the congressional measure. Senators Van Hollen and Alsobrooks both took the floor of the Senate chamber last week to speak out against the bill’s consideration.
“This resolution would literally change the rules in the middle of the game while taxpayers have already started filing returns,” said Senator Alsobrooks. “It would require revising tax forms and systems and could force taxpayers to re-file returns. It would create confusion for families, businesses and tax professionals.”
Senators Alsobrooks and Van Hollen also vehemently denied claims from Speaker Johnson and Rep. Gill that the D.C. City Council’s legislation would exempt residents from certain federal tax provisions enacted in the Big Beautiful Bill.
“This has nothing to do with federal taxes, nothing,” Sen. Van Hollen said. “The people of the District of Columbia are going to get the same federal income tax form as people in every part of the country.”
But the fight isn’t over yet. Shortly after the Senate’s vote to send the bill to President Trump’s desk, Council Chairman Phil Mendelson published a notice that the D.C. bill had become law after a 30-day congressional review period. Congress, however, disagrees on where the 30-day period began for the bill.
Whether or not city officials will choose to challenge the bill’s passage remains to be seen.