Income tax

Income tax reduction proposed in extraordinary session


Headland introduced a bill for the special session reducing all state tax rates by 15%. A similar bill was passed by the North Dakota House of Representatives in the 2021 Regular Legislature, but failed in the Senate.

“This is not exactly the same bill that was considered last spring,” he said, referring to the triggers built into the original bill based on treasury fund balances from the state of North Dakota at the end of the fiscal year. “… this is a direct tax reduction of 15%.”

The bill is one of nearly 40 bills presented for the special session which begins on Monday, November 8. Rep. Chet Pollert, R-Carrington and House Majority Leader, said the bill should be approved by the Deferred Bills Committee for consideration during the session.

Headland said he brought the bill to the special session as a way to collect money for residents of North Dakota.

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For example, the bill would reduce the tax rate of a single person earning less than $ 36,000 per year from 1.1% to 0.94% The saving of a person earning $ 36,000 per year s would amount to $ 58 per year.

The plan would reduce state revenue by $ 150 million, according to estimates from the North Dakota State Tax Commissioner’s office.

The bill would also eliminate an increase in the oil extraction tax from 5% to 6% if the average price of crude oil exceeds $ 90 per barrel.

“We are likely to hit that trigger,” Headland said. “I didn’t think the timing was right for this.”

Headland said oil production in North Dakota has not returned to pre-pandemic levels and that a tax increase could slow that recovery.

The extraordinary session version of the income tax reduction bill could suffer the same fate as the ordinary session bill this spring.

“Not hearing a lot of support, especially from the Senate,” Headland said. “The problem is, they think we don’t have time to look at it in a special session.”

The special session has no statutory time limit, but Pollert has expressed a desire to conclude business within a week. Lawmakers will need to approve a redistribution plan based on the 2020 U.S. Census and develop a spending plan for the federal money provided to the state of North Dakota under the American Rescue Plan Act.

Headland has pledged to raise the tax cut again if it fails in the special session.

“We think the North Dakotas are looking for something,” he said. “This goes in the direction of eliminating income tax. It will be back.”


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