Bottom Tax Bracket North Dakotans Receive Huge Tax Break

North Dakotan's who make under $40,000 annually will be set to have their state taxes zeroed out, with other brackets also seeing breaks.

On April 27, 2023, Governor Doug Burgum signed House Bill 1158 into law. This legislation broadens the eligibility requirements and maximum reduction amounts for those applying for the North Dakota Homestead Property Tax Credit program. This program is aimed at homeowners 65 years of age and older or those who are permanently and totally disabled.

House Bill 1158 will provide $358 million in individual income tax relief by zeroing out the state’s bottom tax bracket and combining the top four brackets into two brackets with reduced tax rates. The two middle income brackets will be taxed at 1.95%, down from 2.04% or 2.27%, and the top two brackets will be taxed at 2.5%, down from 2.64% or 2.9%.

The changes will result in an estimated $104 million in savings for the zeroed-out bottom bracket, $178 million in savings for the combined middle-income brackets and $76 million in savings for the combined top brackets.

The remaining $157 million in the package will be provided as property tax relief in two ways: $103.2 million will be available to homeowners by allowing them to claim a property tax credit of up to $500 on their primary residence, and $53.5 million will be provided by expanding the eligibility requirements and maximum reduction for the state’s Homestead Property Tax Credit program for homeowners 65 and older.

House Bill 1158 originated last August when Governor Burgum unveiled a major flat-tax income tax relief plan. The bill was introduced by Headland, who chairs the House Finance and Taxation Committee, and co-sponsored by Reps. Glenn Bosch, Cole Conley, Jason Dockter, Jim Grueneich, Jared Hagert and Pat Heinert, and Sens. Scott Meyer, Kristin Roers, Terry Wanzek and Jordan Kannianen, who chairs the Senate tax committee.

Burgum noted that tax relief was a priority for both the Legislature and executive branch this session, and while there was much debate over how to provide income and property tax relief, he applauded everyone who came to the table and collaborated on the final relief package.

Income changes to the Homestead Credit for Tax Year 2023:

If your income is:	Taxable value is reduced by:	Maximum reduction of taxable value:	Maximum reduction of true & full value:
$0 – $40,000	100%	$9,000	$200,000
$40,001 – $70,000	50%	$4,500	$100,000

The credit does not reduce the liability of any person for special assessments levied upon any property.

With this new legislation, the asset limit of $500,000 has been removed. Applications must be submitted yearly for approval.

If an individual has already applied for the credit this year, the application will be adjusted to reflect the new percentages.

If an individual qualifies for the program and would like to apply, contact the Williams County Tax Director at (701) 577-4555 or via this online form. For more information about credit and exemption programs, visit the Property Tax Exemptions and Credits webpage.