Senate approves resolution overturning D.C. tax law, raising revenue risks and mid-season filing disruptions

Congress moves to nullify District tax changes adopted during federal tax overhaul

The U.S. Senate has approved a joint resolution to overturn a District of Columbia tax law that temporarily revised how the city conforms its income and franchise taxes to federal rules. The measure, H.J. Res. 142, passed on February 12, 2026, by a 49–47 vote and now heads to the White House for the President’s decision.

The resolution targets the “D.C. Income and Franchise Tax Conformity and Revision Temporary Amendment Act of 2025,” enacted by the D.C. Council on December 20, 2025 and transmitted to Congress on December 30, 2025 under the District’s Home Rule framework. The local law became effective February 12, 2026—the same day the Senate voted to disapprove it—creating an unusual overlap between the start of the District’s policy and the congressional action designed to invalidate it.

What the D.C. law changed

The D.C. Council’s temporary legislation was designed to “decouple” parts of the District tax code from recent federal changes and to direct projected additional local revenue to specific credits aimed at households with lower and moderate incomes.

• An accelerated local match of the federal Earned Income Tax Credit (EITC), moving the District’s match to 100% in the current tax year under the temporary framework.
• A local child tax credit set at $1,000 per qualifying child for eligible families, structured to apply starting in tax year 2026.

District officials and supporters of the local changes have said the decoupling provisions were projected to generate roughly $600 million over four years, with city leaders warning that overturning the law would remove funding tied to the new or expanded credits.

Tax-season timing and administrative consequences

A central dispute is timing. Because the Senate acted after the start of the tax filing season, District officials have warned that changing local tax rules midstream could force revisions to forms, instructions, and processing systems, and could require amended returns for residents and businesses that already filed under the District’s rules.

In addition to taxpayer confusion and potential delays in refunds, officials have raised the prospect of a temporary pause in processing while software systems and third-party tax preparation pipelines are updated. The District has also warned that delayed collections could create short-term cash-flow pressure for city operations.

Home rule, congressional authority, and next steps

Congress retains authority to review and disapprove certain D.C. laws under the Home Rule Act. While disapproval resolutions have been used before, District leaders have emphasized that congressional action to nullify a revenue-related local tax measure is rare in the home rule era.

If signed by the President, H.J. Res. 142 would formally disapprove the Council’s action approving the temporary tax law, setting up immediate questions for the District’s tax administration and budget planning during the 2026 filing season. If the resolution is not enacted, the District’s temporary framework would remain in effect for the period authorized under local law.

Key dates: D.C. Council enactment (Dec. 20, 2025); transmission to Congress (Dec. 30, 2025); local law effective date (Feb. 12, 2026); Senate passage of disapproval resolution (Feb. 12, 2026).