North Dakota governor signs bill exempting military pay from state income tax

BISMARCK — Gov. Doug Burgum on Monday, March 27, signed a bill that exempts military pay from state income tax for active duty, National Guard and Reserve members.

Senate Bill 2293 builds on legislation Burgum signed in 2019 that exempts military retirement pay, the governor's office said in a statement.

“By joining the roughly 20 states that don’t tax military income, North Dakota is recognizing the sacrifice of military service and building on the momentum of our ongoing efforts to make ours the most military-friendly state in the nation,” Burgum said in a statement. He signed the bill in the Black Hawk helicopter hangar at the Guard's Aviation Support Facility in Bismarck.

Minnesota is among the states that fully exempt military pay from state income tax. Nine states have no income tax, including South Dakota. Military members often choose a state with exemptions for military pay or no income tax as their official state of residence, the governor's office said.

North Dakota has about 5,500 Guard and Reserve members and nearly 7,300 active duty service members, primarily at the Air Force bases in Minot and Grand Forks, according to the Department of Defense.

“This historic bill clearly demonstrates the great regard for our military by our state elected leaders,” said Maj. Gen. Al Dohrmann, adjutant general of the state Guard.

Military pay encompasses all federal pay for training, education, mobilization and bonuses as well as state pay when called to support an emergency on state active duty. The bill will save service members an estimated $4 million in income taxes in the 2023-25 budget period, according to a fiscal note accompanying the legislation.

The bill earlier passed the House 89-3 and the Senate 40-4.

“This policy will assist our active duty members and their families when they decide where to set their state residency, it will assist our National Guard with recruiting efforts, and it will assist workforce development by veterans filling job openings once they separate from the military,” said state Sen. Scott Meyer, R-Grand Forks, the bill's main sponsor.