MINOT, N.D. — Even though North Dakota is running a significant budget surplus, the outlook for meaningful tax relief from the Legislature in Bismarck just got quite a bit dimmer.
Heading into this session, there were two competing proposals for delivering tax relief. One is House Bill 1158 , which details Gov. Doug Burgum's plan to eliminate income taxes entirely for most North Dakotans, while reducing the rate for those at the top of the income brackets who would still be obliged to pay. The other is Senate Bill 2066, which would continue the Legislature's futile efforts to buy down local property taxes with state appropriations.
The state has spent $7.25 billion on property tax buydowns over the last decade and a half, to no avail, as most North Dakotans continue to be displeased with their property taxes.
Yet more property tax buydowns is where the Legislature is focused, as the Senate Appropriations Committee just gutted Burgum's proposal. Instead of reducting the state's income tax brackets to just two — a zero percent bracket for North Dakotans making under $44,725 in taxable income per year, and 1.5% for everyone else — the amendment approved by the committee only zeros out the bottom bracket.
Here's how it looks now in the amended legislation :
ADVERTISEMENT
The fiscal note for the original iteration of this bill calculated it at $566.4 million in personal income tax relief in the 2023-25 biennium.
Per the new fiscal note , the income tax cuts would result in about $287.9 million going back to North Dakota taxpayers, an almost 50% reduction in the amount of relief, and without the less tangible benefit of flattening the state's tax code to just two income brackets instead of five.
The amended version of this bill now also includes some property tax policy, including an expansion of the Homestead Property Tax Credit for seniors and disabled property owners, as well as a duplicate of the property tax buy down from SB 2066, which by itself represents $203.1 million in new spending.
Is this what North Dakotans want?
That's complicated. If you were to conduct an opinion poll, most North Dakotans would probably tell you that they prioritize property tax relief over income tax relief. Still, we have 15 years of history demonstrating that the buydown approach to property taxes isn't actually reducing property taxes. Again, we've spent $7.5 billion on that approach, and North Dakotans are still worried about their property taxes.
Perhaps the pertinent question is not "property tax relief or income tax relief," but rather "tax relief you will see, or tax relief you won't."
This is far from over. The House has SB 2066, and can certainly retaliate with its own amendments, but the way things are trending, the tax policy that emerges from this Legislature may tilt more toward failed property tax buydowns than income tax relief.
The Trust Project
