D.C.’s paid family leave program will soon levy a higher tax on employers that the business community fears could hinder its growth — exactly the opposite of what the program was intended to do.
The 4-year-old program, which the city has billed as a draw for residents and companies, will see its 0.26% payroll tax rate on businesses rise to 0.75% — a 188% hike — starting Oct. 1.
The jump, baked into the D.C. Council’s recently adopted $21 billion fiscal year 2025 budget, is projected to drive to the District tens of millions of dollars more than Mayor Muriel Bowser’s earlier proposal would have. The budget, which the council approved Tuesday, now requires
The tax increase stands to impede the city’s ability to lure and retain businesses and, therefore, the city’s competitive prowess long term, Angela Franco, president and CEO of the D.C. Chamber of Commerce, said in a statement to the Washington Business Journal. “If we’re looking to attract businesses to stay or move to downtown D.C., instead of going to Virginia or Maryland, then we need to make it a prudent business decision to do so. Increasing payroll taxes will make it harder for businesses to make that decision.”
