Washington, D.C., Council Chairman Phil Mendelson returned his budget recommendations on Monday with a proposal that cuts deeper into separating the district’s local taxes from President Donald Trump‘s nationwide tax cuts.In late 2025, after Trump signed his One Big Beautiful Bill Act’s sweeping tax cuts into law, the district approved emergency legislation allowing D.C. authorities to “decouple” the district’s tax code from the federal tax code. The district’s financial officials estimated that the move would save the district’s government nearly $100 million by the end of fiscal 2025 and nearly $660 million by the end of fiscal 2029.When Mayor Muriel Bowser unveiled her fiscal 2027 budget proposal in April, she codified the decoupling changes for 2025 and decoupled certain provisions for fiscal years 2026 and 2027. However, Mendelson’s recommendations cut deeper and further decouple the federal tax cut proposals from the D.C. tax code.
“The Committee expands the Mayor’s proposal in two ways. First, the Committee includes language that will allow the Council to recognize the decoupling revenue for FY 2026, revenue created by the original December 2025 legislation but that was not included in the February 2026 revenue estimates or the Mayor’s budget proposal,” Mendelson wrote in the budget report. He estimates that this first expansion added $273.8 million in revenue for fiscal 2026.
