Washington, D.C. Considers Business Activity Tax That Could Include Associations

The Washington, D.C. Council is considering a new Business Activity Tax (BAT) to help close the district’s projected $700 million budget gap. The tax would apply to business activity rather than profits and could reach certain nonprofits with a physical presence or business activity in the district, potentially creating new costs for associations.

No legislation has been formally introduced, and the proposal's scope continues to evolve. The D.C. Tax Revision Commission’s proposal and subsequent draft legislation include certain nonprofits. Some association activities could fall within the current draft, and future versions could apply more directly to associations. The American Society of Association Executives (ASAE) is concerned that associations were specifically named during recent council testimony and that "business activity" could be defined broadly.

ASAE is engaging with D.C.-based organizations as discussions continue. The next major milestone is a feasibility study from the D.C. chief financial officer, expected by the end of January 2027, which will help inform the council's next steps. Click here to view the hearing materials and draft proposal.

For associations with a D.C. presence or business activity, the proposal could mean a new annual tax liability despite their nonprofit status. Association leaders should begin considering the potential budget and operational implications as the proposal develops.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.