Trump Ends Emergency Tax Bill Over $6,000 Senior Deduction and Tip, Overtime Tax Breaks in D.C.

The US Capital at Washington DC during sunset — (Image credit: Getty Images)

What's worse than filing your taxes once? Having to do it twice. But that may be the startling reality for roughly 42,000 District of Columbia residents who were proactive enough to file their tax returns early this year.

As reported by Kiplinger, the D.C. Council recently enacted an emergency bill to decouple local tax laws from the federal 2025 Trump tax bill. That move would have effectively blocked residents from claiming the $6,000 "senior bonus," the "no tax on tips" deduction, and other new federal tax breaks on their District returns.

However, the United States Congress, which holds final review authority over D.C. laws, has struck back. A joint "disapproval" from both the U.S. House of Representatives and the Senate overturned the city's emergency tax law.

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"It's just a mess, it didn't have to happen," D.C. Council Chairman Phil Mendelson told reporters earlier this month, following a Senate vote to overturn the District's emergency legislation.

Now, "early bird" filers might need to refile their income tax returns to capture local tax relief, and all D.C. filers could be forced to finish their income taxes in the fall.

Bonus deduction for older adults and overtime tax breaks are (almost) final in D.C.

Although the newly enacted Trump tax law sets federal policy, states generally have the right to conform their local tax policies or move away from federal law. The act of "moving away" is known as decoupling.

Facing projected revenue shortfalls, the D.C. council passed an emergency law in November to decouple the city's budget from the federal tax overhaul, citing budgetary concerns amid a then-government shutdown.

By opting out of the federal tax breaks, city officials anticipated using the almost $600 million in tax revenue to create a new local Child Tax Credit and bolster the District's version of the federal Earned Income Tax Credit (EITC).

However, Congress has moved to block the District's decision.

Capitol Hill lawmakers challenged the city's maneuver through House Joint Resolution 142, which explicitly "nullifies [recently passed decoupling] legislation enacted by the District of Columbia," effectively forcing the city to realign its local tax code with the new federal standard.

This intervention is possible because, unlike states that have decoupled, Congress maintains ultimate authority over the nation's capital (more on that later).

So, what happens next?

Since the resolution passed both the U.S. House and Senate, it moved to President Donald Trump's desk, where it was signed.

The resolution has drawn sharp criticism from some officials who argue that the District is being used as a pawn at the expense of taxpayers.

“The truth is, this city has already been under unrelenting assault by this [Trump] administration. The amount of bureaucracy in terms of refiling taxes puts another burden as well.” U.S. Senator Mark Warner (D-Virginia) remarked during Senate floor proceedings in February 2026.

The sentiment was echoed by Mendelson, as reported by WAMU, “There’s nothing fair about what’s going on. All they are doing is causing pain to the District government and to taxpayers.”

Taxpayer impact: Should you submit an amended tax return in D.C.?

The Congressional intervention is set to disrupt a tax filing season that is already in full swing. And the impact won't just be legislative, but a potentially massive technical hurdle for the District’s tax infrastructure.

D.C. Chief Financial Officer Glen Lee outlined the negative consequences of the disapproval resolution in a joint letter to congressional leaders.

"Forms and systems for tax year 2025 will no longer be consistent with District law," Lee wrote. ".... adjustments will likely require several months, which would extend District income tax filing deadlines into fall 2026." The financial impact of the decoupling is not only expected to result in lost revenue but, as Lee explains in the letter, "also generate millions of dollars of additional expenses."

The news comes after the District of Columbia anticipates losing up to $1 billion over the next four years due to the projected loss of 40,000 federal government-related jobs from the Trump administration staffing cuts, according to the D.C. Fiscal Policy Institute. Further erosion of the budgetary outlook could force cuts to public services and may negatively impact overall economic health, according to local officials.

Yet some warn that 2026 filers will bear the brunt of these fiscal shifts first.

"I just can't even imagine what it's like to tell thousands of tax filers, 'Oh, I know you filed, you did what you were supposed to do, but, oops, can you do it again?" D.C. Mayor Muriel Bowser, who is not seeking another term, said at a news conference earlier this month.

D.C. officials say changing local tax policy mid-season forces taxpayers who already filed to re-file, causing significant filing delays, and possibly lowering taxpayer compliance.

What does that mean for taxpayers?

Well, for the more than 42,000 residents who have already filed in D.C., they might now need to do the following since Trump signed the decoupling resolution (to take advantage of any applicable federal tax breaks on their local returns):

Wait until D.C.'s new tax systems and forms are up and running.
Use Form D-40 and check the box that it's an amended return.
Include an explanation of the changes and any required forms that were missed.
File online through MyTax.DC.gov or mail the completed amended return within 3 years of the original filing date, or 2 years after paying tax (whichever is later).

For the approximate 361,000 D.C. residents expected to file, processing delays could slow down tax refunds, depending on how long it takes the D.C. Office of Tax and Revenue to update applicable forms and systems.

Is a legal battle looming over the Trump tax law?

While the current fight may be in legislative buildings and press conference meetings, it could soon move to the courtroom.

The District of Columbia Home Rule Act of 1973 gives Congress the authority to review and potentially block any bill passed by the D.C. Council. But that block must occur within a specific window — typically 30 days.

That's why Mendelson recently contended that time stopped ticking at 12 pm on February 12, 2026, which was hours before the House and Senate finalized Joint Resolution 142. On that day, Mendelson posted a formal notice declaring that the review period had expired without federal intervention, effectively making the "decoupling" law permanent.

Congress, however, disagrees. Federal lawmakers argue that the Home Rule Act's definition of "days" is more flexible, accounting only for the days when both congressional chambers are in session. This would mean the review period hadn't expired before the resolution was passed.

D.C. officials haven't filed a lawsuit yet. But tax season is in full swing, a new city budget is due in April, and so the D.C. Council has decisions to make soon. Stay tuned.

Kate is a CPA with experience in audit and technology. As a Tax Writer at Kiplinger, Kate believes that tax and finance news should meet people where they are today, across cultural, educational, and disciplinary backgrounds.