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North Dakotans to get tax credit of up to $350; lawmakers nix tax on Social Security income

Proposals to provide two-year, $350 income tax rebates and to eliminate the state's tax on Social Security income found broad support in North Dakota's conservative Legislature during their special session.

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North Dakota Gov. Doug Burgum delivers a State of the State address to the state House of Representatives on Monday, Nov. 8, 2021. Jeremy Turley / Forum News Service

BISMARCK — Two proposals to extend income tax relief to North Dakotans found overwhelming support during the Legislature’s special session this week and are expected to get signatures when they reach Gov. Doug Burgum’s desk.

Both bills — one to provide hundreds of dollars to North Dakota taxpayers in the next two years and the other to eliminate the state’s tax on Social Security income — were late additions to the Legislature’s busy agenda, drawing broad support on the chamber floors to get consideration during the five-day special session.

A Burgum-backed tax relief proposal, brought by Bismarck Republican Rep. Pat Heinert, would provide up to $350 in rebates to each North Dakota resident who files an income tax return for 2021 and for 2022. That bill cleared the Senate chamber in a 40-7 vote on Friday, Nov. 12, after finding unanimous support in the House the day before .

With the Legislature reconvening partly to dole out $1 billion in federal coronavirus aid for an array of infrastructure, energy and higher education projects, Burgum pushed lawmakers to take some money out of the state’s flush coffers and give it directly to North Dakotans. The second-term Republican plugged the idea several times since he debuted it in September, including in his State of the State address kicking off the special session on the House floor on Monday.

“This bill is a victory for half a million hardworking North Dakotans," Burgum said in a statement Friday declaring his intent to sign the bill and thanking lawmakers for helping to put money "back into the pockets" of people who worked through the pandemic and the economic recovery.

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Meanwhile, a long-discussed idea to eliminate North Dakota’s tax on Social Security income found similar traction in the conservative Legislature this week. The proposal by Minot Republican Sen. David Hogue cleared the House on a unanimous vote Friday after passing the Senate 46-1 earlier in the week.

If Burgum signs that bill, North Dakota would become the 38th state in the country not to tax Social Security income. Nine states have no income tax at all, according to AARP .

Hogue’s bill would finish the work of 2019 legislation that exempted tens of thousands of people from the Social Security tax based on their income levels. At a cost of $14.6 million over the next two years, the proposal permanently axes the tax for the rest of the North Dakotans enrolled on Social Security — around 20,000 people according to state Tax Commissioner Ryan Rauschenberger.

Disabled people and those 62 years and older qualify for the federally administered Social Security program.

Burgum’s shorter-term idea to extend two-year tax relief was initially dismissed by the Legislature’s GOP leadership but ended up flying through both chambers with momentum that House Majority Leader Chet Pollert, R-Carrington, likened to "a locomotive."

Still, Senate Majority Leader Rich Wardner maintained opposition to the proposal and argued Friday on the Senate floor that passing income tax relief now could reduce the state’s capacity to permanently lower taxes when lawmakers return to Bismarck in 2023.

“I would like to see us plan for the future and deliver” on long-term tax reductions, the Senate leader said. Even with the passage of the tax relief bill, Wardner told colleagues that he will take the next year to map out plans for property tax reductions down the line.

The total cost of the two-year program comes out to $211 million, a little over half of the state’s surplus from the last budget cycle.

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With Burgum's signature, around 300,000 North Dakota workers will have their state income tax completely erased for the next two years, Rauschenberger said.

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The chamber of the North Dakota Senate is pictured on Tuesday, Jan. 12, 2021. Jeremy Turley / Forum News Service

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