Sponsor
Eleanor Holmes Norton
Representative · D-DC
Representative · D-DC
The bill quickly extends empowerment-zone tax benefits to a D.C. area to spur local investment and jobs, at the cost of reduced federal revenue, additional administrative complexity, and concerns about fairness to other communities.
D.C. residents and businesses in the designated area gain access to federal empowerment zone tax incentives and related programs starting in 2026, which should increase local hiring and private investment in low-income urban neighborhoods.
The rule preserves the existing national cap on the number of empowerment zones, avoiding displacement of other eligible communities that could lose future designation slots.
Federal revenue will decline to the extent D.C. businesses and residents claim empowerment zone tax incentives starting in 2026, increasing the cost to taxpayers.
Extending these federal tax benefits to D.C. without using an available formal designation slot may be viewed as giving one jurisdiction an advantage over other communities seeking empowerment zone status.
Implementing a deemed-designation and defining the "largest contiguous area" could create administrative complexity for Treasury/IRS, raising compliance burdens and requiring new guidance for state and local governments and taxpayers.
Based on analysis of 2 sections of legislative text.
Treats the largest contiguous eligible area in D.C. as a deemed empowerment zone for tax/program purposes without using a statutory empowerment zone slot.
Creates a special rule that treats the largest contiguous area of the District of Columbia that meets current eligibility rules as if it had been designated an empowerment zone for purposes of federal tax law, without using one of the statutory empowerment zone slots. The rule applies to tax periods beginning after December 31, 2025. This effectively grants the qualifying DC area access to empowerment zone tax incentives and program treatment while preserving the statutory cap on the number of designated empowerment zones elsewhere.
Official title: To amend the Internal Revenue Code of 1986 to extend certain tax benefits related to empowerment zones to the District of Columbia.
Introduced December 9, 2025 by Eleanor Holmes Norton · Last progress December 9, 2025