Disapproving the Action of the District of Columbia Council in Approving the D.C. Income and Franchise Tax Conformity and Revision Temporary Amendment Act of 2025

Floor Speech

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Ms. NORTON. Mr. Speaker, I thank the gentleman for yielding time.

Mr. Speaker, I strongly oppose this unprecedented, undemocratic, and paternalistic disapproval resolution. This disapproval resolution would sabotage the District of Columbia's tax filing season and credit rating.

The substance of the D.C. law that is the subject of this disapproval resolution should be irrelevant to Members of Congress since there is never justification for Congress to legislate on local D.C. matters, but I will discuss it.

The D.C. law, which the D.C. Council unanimously passed, established a child tax credit, increased an existing earned income tax credit, and decoupled D.C.'s tax code from some of the tax provisions in the so- called One Big Beautiful Bill Act.

This disapproval resolution would repeal the D.C. law. Let's be clear: The D.C. law changed only the D.C. tax code. It did not, and could not, change the Federal tax code.

The D.C. tax filing season began last week. This disapproval resolution would change D.C.'s tax code during the current tax filing season, causing an administrative nightmare for D.C. and tax software companies. D.C. would have to suspend the current tax filing season for several months to update tax forms and guidance, and taxpayers who have already filed returns would have to file amended returns.

The D.C. law is not unique. Like D.C., approximately half of the States, both red and blue, automatically adopt Federal tax changes in their tax codes. However, like D.C., several of these States, both red and blue, have passed laws decoupling their tax codes from some of the tax provisions in the One Big Beautiful Bill Act.

The approximately 20 States, both red and blue, that link their tax codes to the Federal tax code, as of a specific date would have to change that date to adopt the tax provisions of the One Big Beautiful Bill Act. The D.C. law expires in 225 days, giving D.C. time to evaluate which provisions in the One Big Beautiful Bill Act it wants to permanently adopt or decouple.

This disapproval resolution could harm D.C.'s credit rating, forcing D.C. to pay higher interest rates. Rating agencies consider the possibility of Congress meddling in D.C.'s fiscal matters as negative for D.C.'s rating, but also consider as positive that ``Congress has never voided or otherwise overturned a revenue-raising measure approved by the District.''

If this disapproval resolution were enacted, Congress would have overturned a revenue-raising measure approved by D.C. Last year, when Congress cut D.C.'s local budget by $1 billion, D.C.'s rating was put on negative watch. This disapproval resolution is an even bigger threat to D.C.'s rating.

The D.C. law established a child tax credit and increased an existing earned income tax credit. These credits are projected to reduce child poverty in D.C. by 20 percent. This disapproval resolution would repeal these credits.

The D.C. law is expected to generate approximately $600 million in local revenue over the next 4 years. If this disapproval resolution were enacted, D.C. would have to make up for that lost revenue, such as by cutting critical programs.

The 700,000 D.C. residents, the majority of whom are Black and Brown, are capable and worthy of self-government. I urge my colleagues to oppose this disapproval resolution and to instead make D.C. a State. Free D.C.

Mr. Speaker, I include in the Record a letter to Congress from the D.C. Office of the Chief Financial Officer, an independent office established by Congress. Government of the District of Columbia, Office of the Chief Financial Officer, February 2, 2026. Re Impact of Joint Resolution on District of Columbia Finances. Hon. Mike Johnson, Speaker, House of Representatives. Hon. John Thune, Majority Leader, U.S. Senate. Hon. Hakeem Jeffries, Minority Leader, House of Representatives. Hon. Charles Schumer, Minority Leader, U.S. Senate.

Dear Speaker Johnson, Leader Jeffries, Leader Thune, and Leader Schumer: We are providing information on the financial implications to the Government of the District of Columbia from Joint Resolution of Disapproval H.J. Res. 142 and Joint Resolution of Disapproval S.J. Res. 102 (collectively, the Joint Resolution).

If the joint Resolution passes both the House and Senate and is signed by the President, the changes in District law enacted by The District's Income and Franchise Tax Conformity and Revision Temporary Amendment Act of 2025 (the Tax Amendment Act), which de-coupled the District from certain provisions of the One Big Beautiful Bill Act, H.R. 1, Public Law 119-21 (OBBBA), would be invalidated.

This document reviews the implications of the Joint Resolution on the District's current four-year Financial Plan, the District's tax administration processes, and the District's cash position. Financial Plan

The Joint Resolution would not have a material impact on the four-year financial plan approved by the Mayor and D.C. Council, and by Congress.

In the September 2025 Revenue Estimate issued by my office, the District estimated a reduction in revenue from the implementation of OBBBA provisions. However, such reduction was estimated to be offset by revenues collected by the District under current law (i.e., not taking into account the impact of implementing the Tax Amendment Act) and as a result of the general state of the economy in the District of Columbia.

In particular, personal income tax revenues are estimated to be strong due to capital gains earnings by higher-income households, and corporate tax revenues are expected to increase due to strong growth in earnings by businesses that have a presence in the District of Columbia. Tax Administration

Enactment of the Joint Resolution will disrupt the District's ability to collect income tax revenues associated with annual income tax filings due by April 15, 2026.

Several of the provisions in the District's Tax Amendment Act were applicable for tax year 2025, and for certain taxpayers, tax years 2022, 2023, and 2024. Beginning last fall, the District's tax administration agency, the Office of Tax and Revenue (OTR), undertook efforts to implement the legislation in time for the opening of the tax filing season on January 26, 2026.

Implementation required substantial changes to OTR's systems and taxpayer forms for nearly all aspects of income and franchise tax filings by District residents, trusts and estates, as well as all corporations, unincorporated businesses, and partnerships doing business in the District. It also required OTR staff training and outreach to tax software vendors, the tax preparer community, and taxpayers.

Enactment of the Joint Resolution means that the changes that were made to OTR's forms and systems for tax year 2025 will no longer be consistent with District law. As a result, OTR would need to suspend the current filing season until such time as it can make the necessary changes to revert the District's tax administration system to conform with legal requirements prior to the Tax Amendment Act's enactment. The necessary changes include, but are not limited to:

Updating forms, schedules, and instructions. Forms and other relevant filing documents must be developed. Additionally, preparation for each filing season typically begins immediately after the start of the previous season. If OTR is required to re-work tax year 2025 now, they will be managing two filing seasons concurrently (i.e., Tax Years 2025 and 2026).

Systems changes. Reprogramming the tax processing system will be required. This includes development of business and system requirements, and tasks associated with Modernized Electronic Filing. As noted previously, OTR would be required to manage two filing seasons concurrently.

Changes to software of tax processing vendors. Vendors will need to reconfigure software to allow taxpayers to properly file. If the District must reverse the changes pursuant to implementing the Act, it could be at risk of losing vendors who normally participate in DC tax filing, as the current products that are already approved and in use would no longer be valid.

For the current filing season, OTR managers estimate that adjustments will likely require several months, which would extend District income tax filing deadlines into fall 2026. The adjustments will also generate millions of dollars of additional expenses that must be paid by the District's General Fund resources. Cash Flow

Invalidation of the Tax Amendment Act may lead to District cash flow disruptions. In addition to the administrative burdens described above, the District is assessing the impact of the invalidation of the Tax Amendment Act on the timing of collections of income tax revenues and the related cash flow, among other matters. For example, it is possible that an extension in filing deadlines could lead to a shift in the timing of collections in income tax revenue from Fiscal Year 2026 to Fiscal Year 2027, thereby creating a shortfall in cash collections of approximately $400 million in FY 2026.

Please do not hesitate to contact me if you have questions. Sincerely, Glen Lee.

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Ms. NORTON. Mr. Speaker, the letter states that if this disapproval resolution were enacted, the office would have to suspend the current D.C. tax filing season for several months to update tax forms, schedules, and instructions, to reprogram the tax processing system, and for tax preparation companies to update their software.

Mr. Speaker, I include in the Record a joint letter to Congress from D.C.'s elected Mayor and the elected council chairman strongly opposing this disapproval resolution. February 2, 2026. Hon. Mike Johnson, Speaker, House of Representatives. Hon. Hakeem Jeffries, Minority Leader, House of Representatives. Hon. John Thune, Majority Leader, U.S. Senate. Hon. Charles Schumer, Minority Leader, U.S. Senate.

Dear Speaker Johnson, Leader Jeffries, Leader Thune, and Leader Schumer: We write to express our strong opposition to Joint Resolution of Disapproval H.J. Res. 142 and Joint Resolution of Disapproval S.J. Res. 102. These resolutions are an intrusion on the District's Home Rule authority and would have major and immediate impacts on tax administration in the District. We very strongly urge you and your colleagues to oppose these resolutions.

The District of Columbia is one of many jurisdictions across the Nation that routinely modifies its local tax code in accordance with federal tax laws, including choosing to decouple from federal tax changes to address local concerns or mitigate projected fiscal impacts. At the end of last year, multiple states and the District decided to decouple their tax codes from some provisions of H.R. 1. While the District adopted the majority of H.R. 1 provisions, a small number were temporarily set aside. These decisions were made through the District's legislative process and are the same type of policy judgments that every state and local government routinely makes on behalf of their residents.

The timing of these resolutions are especially problematic. The District is already a month into the 2026 tax year and has begun accepting and processing tax returns. Disapproval at this stage would create huge administrative challenges, require taxpayers to re-file their taxes, render existing guidance and forms obsolete, and necessitate rapid mid-year changes to tax administration systems. It is unclear how quickly commercial tax preparation software could be updated to accommodate such changes, and District residents and businesses would likely experience confusion, as well as delays. The resolutions would lead to the District's income tax filing deadlines to be pushed to Fall 2026 and would cause millions of dollars in additional expenses.

We strongly urge you to oppose the disapproval resolutions and to respect the District's governance of its local fiscal affairs. Sincerely, Muriel Bowser,

Mayor. Phil Mendelson,

Chairman, Council of the District of Columbia.

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Ms. NORTON. Mr. Speaker, while they disagreed on whether the D.C. Council should have enacted the D.C. law that is the subject of this disapproval resolution in the first place, they both strongly oppose this disapproval resolution. Their letter states that this disapproval resolution, if enacted, not only would violate D.C.'s right to self- government but ``would have major and immediate impacts on tax administration in the District.''

Mr. Speaker, I finally include in the Record a letter to Congress from the D.C. business community. February 3, 2026. Hon. Mike Johnson, Speaker, House of Representatives. Hon. John Thune, Majority Leader, U.S. Senate. Hon. Hakeem Jeffries, Minority Leader, House of Representatives. Hon. Charles Schumer, Minority Leader, U.S. Senate.

Dear Speaker Johnson, Leader Thune, Leader Jeffries, and Leader Schumer: We write to you, in unison, as representatives of the District of Columbia's business organizations, urging you to oppose the Joint Resolution of Disapproval H.J. Res. 142 and Joint Resolution of Disapproval S.J. Res. 102 that would reverse the District's decision to decouple the local tax code from some provisions of the One Big Beautiful Bill Act's federal tax code changes.

A reversal of decoupling would create chaos in the middle of tax filing season. The District has already begun accepting and processing returns. It would take the DC government and private vendors months to adjust local tax administration. Filing deadlines would have to be pushed back to the Fall of 2026. Delaying local income tax collection would create a local cash shortfall of up to $400 million in FY26, according to the DC Chief Financial Officer.

Local tax code decoupling from the federal tax code is not unique. Many states have also voted to decouple from provisions in the One Big Beautiful Bill Act, as they have many times in the past in response to federal tax changes.

Changes at this stage in the process would create fiscal instability and uncertainty, impeding the District's ability to attract investment. There are many ways that Congress has and can continue to use its power to make the District a vibrant city where Americans want to live, visit, and do business, and we welcome your support for the District of Columbia. Sincerely,

The Washington, DC Business and Civic Community; Anthony Williams, CEO & Executive Director, Federal City Council; Jack McDougle, President & CEO, Greater Washington Board of Trade; Chinyere Hubbard, President & CEO, DC Chamber of Commerce; Lisa Mallory, President & CEO, Apartment & Office Building Association of Metropolitan Washington; Scott Reiter, CEO, DC Association of REALTORS; Jacqueline D. Bowens, President & CEO, D.C. Hospital Association; Liz DeBarros, CEO, District of Columbia Building Industry Association; Edward Krauze, CEO, Greater Capital Area Association of Realtors; Solomon Keene, President & CEO, Hotel Association of Washington, DC; Malcom Fox, Executive Director, Opportunity DC.

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Ms. NORTON. Mr. Speaker, while the D.C. business community may not have supported the D.C. law that is the subject of this disapproval resolution, their letter states they oppose this disapproval resolution because it would, if enacted, cause ``chaos in the middle of tax filing season'' and ``create fiscal instability and uncertainty, impeding the District's ability to attract investment.''

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