Credits and breaks for District of Columbia families: the 85% EITC, Schedule ELC, Schedule H and the child care credit

A District family gets nothing on Form D-40 for simply having children: there is no child tax credit for 2026 and no exemption per dependent, only the standard deduction for the filing status. The money is in four credits, and three of them are refundable. The DC earned income tax credit is 85% of the federal credit for 2026 through 2028, paid out even if no tax is owed and available to filers with ITINs. The Keep Child Care Affordable Tax Credit on Schedule ELC pays up to $1,200 per child under age four in a licensed child development facility, for 2025, with the 2026 figure to come. Schedule H refunds up to $1,425 (2025) of property tax or imputed rent to households with federal AGI under $66,000. And the child and dependent care credit on Line 21 is 32% of the federal credit, nonrefundable. On top of those, contributions to the DC College Savings Plan come off income at up to $4,000 per person.

The rates these credits work against are steep for a city: 4% on the first $10,000 of taxable income, 6% to $40,000, 6.5% to $60,000 and 8.5% from there, the same for every filing status. The return itself is walked through in How District of Columbia income tax works. This article is about the lines that matter when there are children in the house.

The DC earned income tax credit

The District’s EITC is a percentage of the federal earned income credit, claimed on Line 27 of the D-40, and refundable. For 2026 through 2028 the percentage is 85% under the Fiscal Year 2027 Budget Support Act (Law 26-189), with a return to 100% scheduled after 2028 under current law. A family whose federal EITC is $4,000 receives $3,400 from the District on top of it.

Three features make the District’s version reach further than the federal one. Filers with an ITIN instead of a Social Security number qualify: the District credit is computed as if the federal SSN rule did not exist, so a family the IRS turns away is paid here. Workers without a qualifying child get an enhanced District credit computed on its own worksheet, with a maximum that followed the federal childless maximum in 2025, $649, and a wider income range than the federal credit (verify 2026 figures and whether the 85% applies). And a non-custodial parent who paid court-ordered child support for the year may claim a District EITC on Schedule N, which has no federal counterpart.

One option is unique to the District. A DC EITC of $1,200 or more can be taken in twelve monthly payments instead of a lump sum, by checking the oval on Line 27. The monthly money counts as income for some benefit programs, and OTR’s instructions warn that it can affect SNAP, so the choice is worth a conversation before the oval is marked. The federal rules on who is a qualifying child, which parent claims a child after a divorce, and the investment income limit all carry over, because the District credit is a percentage of the federal one.

Child care: two credits, one receipt

Child care expenses can earn two separate District credits, and a family with a toddler in a licensed center often gets both.

The child and dependent care credit, Line 21. This is 32% of the federal child and dependent care credit, nonrefundable, so it can only reduce District tax to zero. The federal credit for 2026 is a percentage of up to $3,000 of expenses for one child or $6,000 for two or more, the percentage starting at 50% and falling with income to 35% and then to 20%, so a family with $42,000 of AGI and $6,000 of expenses has a federal credit of about $2,160 and a District credit of about $691. The December 2025 temporary act had cut the District percentage to 24.25%, but that cut did not carry into the FY2027 law; the reviewer should confirm 32% holds for 2026.

The Keep Child Care Affordable Tax Credit, Schedule ELC. This one is refundable and much larger for the families it reaches. For 2025 it pays up to $1,200 for each child who was under age 4 on September 30 of the tax year and whose care was paid to a licensed child development facility, for households with District taxable income up to $180,100 ($90,000 married filing separately). The 2026 figures are to come in OTR’s October 2026 notice, which had not been posted as of early November. The credit is not available for a child in the District’s subsidized child care program, for a child someone else claims as a dependent, or for expenses reimbursed by a social service agency. Food, lodging, clothing and entertainment are not qualified expenses; neither is child support. The facility’s license number goes on the schedule. Because the age test is as of September 30, a child who turned 4 on October 1 still counts for the whole year.

Schedule H: the housing credit for renters and owners

Schedule H, the Homeowner and Renter Property Tax Credit, is the District’s largest break for lower- and middle-income households with children, because it treats rent as property tax. For 2025 the credit is up to $1,425 for a household whose federal AGI is under $66,000 (or $90,000 if the claimant is 70 or older). A renter counts 20% of the year’s rent as property tax; a homeowner uses the real property tax from the bill, without interest, penalties or special assessments. The worksheet then compares that figure with a percentage of income and pays the excess, up to the maximum. The credit is refundable, claimed on Line 28 of the D-40, and can be filed on its own by someone who does not have to file a D-40. A family that cannot be claimed as someone else’s dependent and does not live in tax-exempt housing owned by a government, a house of worship or a nonprofit generally qualifies. The 2026 maximum and income limits are to come.

No child tax credit, no exemptions

The District enacted a $420 child tax credit in 2024 and repealed it effective September 30, 2024, before it paid out; a $1,000 credit written into the December 2025 temporary conformity act did not survive into the Fiscal Year 2027 budget (verify). For 2026, the only place a child appears on the D-40 is in the filing status, in the EITC count on Line 27a, on Schedule S as a dependent, and on Schedules ELC and H. There are no personal or dependent exemptions; Law 26-189 formally repealed the section of the code that once provided them. The federal $2,200 child tax credit, like the federal standard deduction, is taken below federal AGI and never reaches the District return, which is why a family with three children and a family with none pay the same District tax on the same income before credits.

Head of household

Head of household is a filing status on the D-40 as it is federally, and it is worth more here than the label suggests. The District standard deduction for head of household was $22,500 for 2025, against $15,000 for a single filer: $7,500 more off the top, worth $450 to $640 at the 6% to 8.5% rates. The brackets themselves do not change with status, so there is no wider bracket for head of household, only the larger deduction. The federal tests govern: unmarried or treated as unmarried on the last day of the year, paying more than half the cost of keeping up a home that was the main home of a qualifying child or relative for more than half the year. A parent who moved into the District mid-year prorates the standard deduction on the part-year return.

Education: the 529 subtraction and nothing else

The District has no K-12 credit and no tuition credit of its own. What it has is a subtraction for contributions to the DC College Savings Plan, the District’s own 529: up to $4,000 a year per person, $8,000 on a joint return when each spouse owns an account, with contributions over the limit carried forward for five years. The subtraction is on Schedule I, Calculation B, and reduces income at the household’s top rate, so $4,000 saves $340 for a family in the 8.5% bracket. Contributions to another state’s plan do not qualify (verify). The federal education credits, the American Opportunity and Lifetime Learning credits, reduce federal tax only and have no District counterpart; a 529 withdrawal that is tax-free federally is tax-free here, because it never enters AGI.

District public school teachers have two small subtractions of their own, $500 for classroom materials and $1,500 for tuition and professional development, on Schedule I.