SB 2282 - Income Tax Credit for Employer Provided Child Care Payments

Beginning with tax year 2025, the bill established a new income tax credit for employer provided child care payments. The income tax credit is available to any taxpayer that is an employer and may be earned by employer payments made directly to child care facilities or to employees for reimbursement of their child care costs for qualified child care.

The general provisions for the tax credit program are:

• The tax credit is equal to 50% of an employer’s aggregate qualified child care payments made during the tax year.
• The tax credit is available for the first $1,000 of payments to or attributable to each employee.
• The employer must provide an equal opportunity for all its employees with child care costs to participate.
• Qualified payments include those made to child care facilities licensed in North Dakota and payments to licensed facilities located within ten miles of North Dakota.
• There is no limit on the amount of tax credit that may be earned for any tax year.
• The credit is nonrefundable and any credit earned in excess of a taxpayer’s tax liability may not be carried over to succeeding tax years.
• The tax credit is available to corporations, individuals, estates, trusts, and passthrough entities.
• A tax credit earned by a passthrough entity is passed through and allowed to each owner in proportion to their respective interests in the passthrough entity.

Statute Affected: Created new section to N.D.C.C. ch. 57-38 and amended N.D.C.C. §57-38-30.3.

Effective Date: Taxable years beginning after December 31, 2024

SB 2038 - Disclosure of Tax Incentive Information

Senate Bill 2038 amends existing law to require that the Office of State Tax Commissioner disclose the amount of any tax exemption granted to a taxpayer to the legislative management chairman or a chairman of legislative standing committee upon request.

The bill expands the existing law which provides for similar disclosures related to tax credits and deductions claimed. The law does not allow the Tax Commissioner to disclose the taxpayer’s name or any other information that is restricted under N.D.C.C. Title 57.

Statute Affected: N.D.C.C. § 57-01-02(17)

Effective Date: Tax incentives claimed or granted after December 31, 2024

H.R. 1 - One Big Beautiful Bill Act

On July 4, 2025, President Donald Trump signed into law the budget reconciliation bill from the House of Representatives (H.R.) One Big Beautiful Bill Act, which included several federal income tax provisions.

One significant issue addressed was making permanent many of the prior changes of the Tax Cuts and Jobs Act of 2017, which were previously set to expire after tax year 2025. New individual income tax changes include partial exclusions or deductions for tip income, overtime pay, car loan interest, and charitable contributions.

There were also changes to standard deductions, various itemized deductions, and child tax credits. Some of the new changes are retroactive to 2025, with some being permanent and other provisions expiring after year 2028.

The starting point for computing North Dakota income taxes is automatically tied to the computation of federal taxable income. Therefore, any federal changes to income or deductions automatically flow through and similarly impact the computation of North Dakota taxable income. Changes to federal tax credits do not have any direct impact on the computation of North Dakota taxable income.

While the computation of North Dakota taxable income is tied to the federal computation, existing North Dakota individual income tax rates and brackets are set in North Dakota law and for 2025 remain unchanged as published last year.

The annual indexing of individual income tax brackets and income tax withholding tables applicable for 2026 will be published in November when the federal inflation information becomes available.

Statute Affected: Enacted by the Senate and House of Representatives and 119th Congress of the United States of America Public Law (PL) 119-21.

Effective Date: Taxable years beginning after December 31, 2024 and 2025

SB 2047 - WITHHOLDING EXEMPTION FOR MILITARY PAY

Beginning with tax year 2026, income from military pay that qualifies for the military pay deduction (found in N.D.C.C. § 57-38-30.3, subsection 2, subdivision g) is no longer subject to North Dakota income tax withholding provisions. If a taxpayer wishes to have withholding deducted from the exempt pay, they can instruct the employer to do so.

Statute Affected: N.D.C.C. § 57-38-59

Effective Date: Taxable years beginning after December 31, 2025

HB 1176 - PROPERTY TAX RELIEF

PRIMARY RESIDENCE CREDIT

House Bill 1176 continues and updates the Primary Residence Credit (PRC) program established during the 2023 Legislative Session under House Bill 1158. Qualifying PRC applicants receive an annual property tax credit against the property taxes due on their primary residence. Key updates include:

• Expansion of the maximum credit from $500 to $1,600 per primary residence
• One-time special application period for mobile homeowners.
• Funding the program with legacy fund earnings
• Creating a new primary residential property class for tax years after 2025

Statute Affected: N.D.C.C. § 54-27, 57-02, 57-02-01, 57-02-08.9, and 57-02-08.10

Effective Date: Tax years beginning after December 31, 2024

RENTER'S REFUND

House Bill 1176 increases the maximum benefit under the Renter’s Refund program from $400 to $600. The Renter’s Refund program provides a partial refund of rent paid for a renter’s place of residence or mobile home lot.

Statute Affected: Section 57-02-08.1

Effective Date: Tax years beginning after December 31, 2024

DISABLED VETERAN'S CREDIT

House Bill 1176 increases the maximum benefit under the Disabled Veteran’s Credit program from $8,100 to $9,000. The bill also allows a Disabled Veteran’s benefit for a parent or child and clarifies the definitions of child, homestead, and parent for Disabled Veteran’s Credit program purposes.

Statute Affected: N.D.C.C. § 57-02-08.8

Effective Date: Tax years beginning after December 31, 2024

ADMINISTRATIVE IMPACTS

House Bill 1176 also:

• Places a 3% annual cap on how much local governments can increase property taxes levied
• Provides for an interim legislative management study of property tax reform and relief
• Eliminates estimated property tax notices and replaces with Notice of Assessment
• Requires notice of budget hearings to all property owners
• Updates information required on property tax statements

Statute Affected: N.D.C.C. § 57-15-14.2

Effective Date: Tax years beginning after December 31, 2024

Other impacted statutes and effective dates:

• N.D.C.C. § 57-02-53, 57-09-04, 57-11-03, 57-12-06, 57-15-02.2, and 57-20-07.1 - Effective August 1, 2025
• N.D.C.C. § 57-02-27 and 57-02-27.1 - Effective January 1, 2026

SB 2201 - TRUST ELIGIBILITY FOR PRIMARY RESIDENCE CREDIT

Senate Bill 2201 expands the primary residence property tax credit to allow certain property held in trusts, life estates, and property being purchased under a contract for deed to qualify as a primary residence. This allows an estimated 3,900 additional residences to qualify for the credit. The bill makes the eligibility retroactive to taxable years 2024 and 2025. An emergency clause in the bill allowed those newly eligible to apply until May 1, 2025.

Statute Affected: N.D.C.C. § 57-02-08.9

Effective Date: Retroactively effective for the first two taxable years beginning after December 31, 2023

HB 1180 - DISABLED VETERAN’S CREDIT

The Disabled Veteran’s Property Tax Credit provides property tax relief for disabled veterans with a service-connected disability of 50 percent or greater. The credit, including the expansion under HB 1176 noted above, is up to 100 percent of the taxes levied on the first $200,000 of true and full value or $9,000 in taxable value.

House Bill 1180 aligns state laws with the federal terminology used by the Department of Veterans Affairs (VA). The bill ensures that veterans receive the benefit based on the rate at which they are being paid by the United States Armed Forces.

Statute Affected: N.D.C.C. § 57-02-08.8

Effective Date: Taxable years beginning after December 31, 2024

HB 1279 - COAL CONVERSION FACILITIES PRIVILEGE TAX AND LIGNITE RESEARCH TAX

HB 1279 extends tax relief for certain coal conversion facilities with a phase out over time, changes the fund share from the general fund to the legacy fund for the carbon dioxide capture credit, extends counties’ ability to provide a full or partial exemption from coal severance tax, and adjusts allocations of the coal conversion tax.

The phase-out of the exemption from the state share of the coal conversion facilities tax is as follows:

• 7/1/26-6/30/27 – 90% exemption
• 7/1/27-6/30/28 – 80% exemption
• 7/1/28-6/30/29 – 70% exemption
• 7/1/29-6/30/30 – 60% exemption
• 7/1/30-6/30/31 – 35% exemption

Statute Affected: N.D.C.C. § 57-60-02, 57-60-02.1, 57-60-02.2, 57-60-14, and 57-61-01

Effective Date: The coal severance tax changes are effective for taxable production after June 30, 2025. The remainder of the bill is effective for taxable production after June 30, 2026.

SB 2039 - PROPERTY TAX CLASSIFICATION OF CERTAIN FARM STORAGE BUILDINGS

SB 2039 updates the definition of “raising agricultural crops” to include the storage of harvested crops produced by a farmer or a direct relative of the farmer until the crop is delivered to the first end-point user.

The bill also modifies the property tax exemption for farm buildings and improvements and provides that certain structures owned by a farmer and used exclusively for storage of harvested crops produced by the farmer or a direct relative of a farmer are exempt farm structures even if they are located on platted land within the corporate limits of a city.

Statute Affected: N.D.C.C. § 57-02-01(1) and 57-02-08(15)(a)

Effective Date: After December 31, 2025

SB 2152 - STATEMENTS OF FULL CONSIDERATION

SB 2152 updates law to require that statements of full consideration, indicating the full price paid be on the face of each deed filed with the county recorder for sales of agricultural lands of less than eighty acres [32.37 hectares].

Statute Affected: N.D.C.C. § 11-18-02.2

Effective Date: August 1, 2025

SB 2367 - VALUATION OF AGRICULTURAL LAND

SB 2367 refines and updates the process of assessing agricultural property in North Dakota, putting greater emphasis on actual use of the land and providing a process for assessors and property owners to address adjustments based on modifiers. The changes require that:

• Actual use of agricultural property is the primary factor in determining value of agricultural property.
• County tax directors develop a schedule of modifiers and directions for their use in adjusting agricultural property assessments.
• County tax directors submit the schedule of modifiers and directions to the State Supervisor of Assessments for approval.
• Property owners are allowed to apply to their counties for modifiers to be used regarding their land.
• Assessors consider applications for modifiers.
• Property owners notify the assessor if there is a change that affects the modifier on their property and that Assessors periodically review properties for changes in use.

Statute Affected: N.D.C.C. § 57-02-27.2(8) and 57-02-27.2(9)

Effective Date: Taxable years beginning after December 31, 2025

HB 1466 - DOMESTIC AND MANUFACTURING DISTILLERIES

House Bill 1466 updates the production limits for domestic distilleries and manufacturing distilleries to a limit of 25,000 gallons and 40,000 gallons per year, respectively. The bill introduces new definitions to N.D.C.C. § 5-01-01:

• Domestic Distillery - a distillery that produces 25,000 gallons or fewer of distilled spirits in a year.
• Manufacturing Distillery - a distillery that produces 40,000 gallons or fewer of distilled spirits in a year.
• Satellite Location - an offsite location owned or leased by a manufacturing distillery to conduct retail operations.

Additionally, the bill revises the proof gallon to liter ratio for self-distribution, effectively increasing the production limits related to distillery self-distribution privileges, from 42,000 liters to 45,425 liters per year.

Lastly, it expands the locations a manufacturing distillery can use a special event permit to include off-premises events, on-premises events, and events at the manufacturing distillery’s satellite location.

Statute Affected: N.D.C.C. §§ 5-01-01, 5-01-19.1, and 5-01-19.2 9(2)

Effective Date: August 1, 2025

SB 2136 - BEER MANUFACTURER AND BEER WHOLESALER RELATIONSHIPS

Senate Bill 2136 updates the regulations regarding the relationship between beer manufacturers and wholesalers. It specifies that a brewer may not require a wholesaler to use a specific e-commerce platform. Additionally, the bill clarifies that the brewer-wholesaler contracts must continue when a brewer is sold to a new owner.

Statute Affected: N.D.C.C. §§ 5-04-02 and 5-04-14

Effective Date: August 1, 2025

HB 1440 - CIGAR LOUNGES

House Bill 1440 modifies the cigar lounge certification process, clarifying that the initial cigar lounge application does not need to include sales information. The bill also expands the type of products that can be smoked at a cigar lounge to include pipe tobacco.

Statute Affected: N.D.C.C. § 23-12-10(3d)

Effective Date: August 1, 2025

HB 1281 - FIRE DEPARTMENT MOTOR FUEL TAX REFUNDS

House Bill 1281 establishes a new motor fuel and special tax refund available for fuel purchases made by a fire department certified under N.D.C.C. § 18-04-02.

For purchases made after June 30, 2025, fire departments may file a claim for a refund of motor vehicle fuel (gasoline/gasohol), special fuel (undyed diesel), and aviation fuel (jet fuel or aviation gasoline) taxes. Claims for refund must be filed between January 1 and June 30 of the year following the fuel purchases.

Statute Affected: N.D.C.C. §§ 57-43.1-03.3, 57-43.2-04.5, and 57-43.3-03.1

Effective Date: July 1, 2025

HB 1578 - COMMERCIAL TOWING SERVICE VEHICLE TRANSFERS

House Bill 1578 establishes a new motor vehicle excise tax exemption for vehicles that are registered and titled by a commercial towing service.

The exemption applies when the towing service transfers a vehicle into their name after obtaining a release from the North Dakota Department of Transportation (NDDOT) for the abandoned motor vehicle.

Statute Affected: N.D.C.C. § 57-40.3-04 and 23.1-15-07(2)

Effective Date: July 1, 2025

SB 2207 - TRIBAL GOVERNMENT VEHICLE PURCHASES

Senate Bill 2207 amends the motor vehicle excise tax exemption for governmental entities to include tribal governments of a federally recognized Indian tribe.

For purposes of this exemption, an Indian tribe is defined as a tribal government agency, instrumentality, or political subdivision that performs essential government functions. Tribal business enterprises will not qualify for the exemption.

Statute Affected: N.D.C.C. § 57-40.3-04(2)

Effective Date: July 1, 2025

HB 1483 - OIL EXTRACTION TAX RATE REDUCTION FOR WELLS OUTSIDE BAKKEN OR THREE FORKS FORMATIONS

House Bill 1483 expands the existing rate reduction for oil extraction tax for a well certified by the Industrial Commission outside of the Bakken and Three Forks formations.

The 2% rate will now be applicable on the first 300,000 barrels produced during the first 36 months after the well is completed. The bill removes the requirement for new qualifying wells to be ten miles or more outside an established Bakken or Three Forks field. It also clarifies that this tax exemption will not apply to wells within the exterior boundaries of a reservation unless the tribe chooses to opt in to the exemption.

The bill directs Legislative Management to consider a study during the 2025-26 interim to analyze the oil extraction tax exemption for stripper wells, considering the number of stripper wells and the level of production for qualification, the estimated fiscal impact of exemption, and any alternative policies that could be implemented for stripper wells.

Statute Affected: N.D.C.C. § 57-51.1-03(4)

Effective Date: July 1, 2025

SB 2397 - DEVELOPMENT INCENTIVE WELL OIL EXTRACTION TAX EXEMPTION AND GAS TAX EXEMPTION

Senate Bill 2397 has two components. First, it expands the existing gas tax exemptions to include an exemption for gas used as fuel in the operation of the lease site for drilling or production of oil or gas.

The expansion also applies to gas produced from an enhanced oil recovery project that utilizes gas for injection, up to the point where the volume of the initially injected gas has been recovered. Additionally, the previous requirement that generators at the well site must consume at least 75% of the gas produced has been removed.

Secondly, the bill establishes a new oil extraction tax exemption for development incentive wells. A development incentive well is defined as one that:

• Is spud after June 30, 2025.
• Utilizes a new or innovative drilling or completion technique that is a technical advancement.
• Demonstrates the ability to access a formation that otherwise would remain undeveloped.
• Is designed and anticipated to increase the number of wells, increase production, or boost the ultimate recovery of oil or gas from a well.

To qualify for the oil extraction tax exemption, development incentive wells must receive certification from the North Dakota Industrial Commission.

The first 250,000 barrels of oil from a certified development incentive well drilled and completed before July 1, 2028, may be exempt from the oil extraction tax.

The exemption will not apply to wells located within the exterior boundaries of a reservation unless the tribe chooses to opt in by providing written notice. The development incentive well oil extraction tax exemption will expire on June 30, 2031.

Statute Affected: N.D.C.C. §§ 57-51-02.6, 57-51-05, 57-51.1-01, and 57-51.1-03

Effective Date: July 1, 2025

HB 1139 - FIRE DEPARTMENTS

House Bill 1139 creates a new sales and use tax exemption for purchases made by a fire department certified under N.D.C.C. § 18-04-02 to provide fire protection services.

Fire departments that are not currently qualified to make exempt purchases may apply for a North Dakota Certificate of Exemption beginning July 1, 2025. This certificate must be presented to the vendor when the fire department makes an exempt purchase.

Statute Affected: N.D.C.C. § 57-39.2-04

Effective Date: July 1, 2025

SB 2369 - EDUCATIONAL, RELIGIOUS, OR CHARITABLE EVENTS HELD AT A PUBLICLY OWNED FACILITY

Senate Bill 2369 revises the sales tax exemption for educational, religious, or charitable activities where the net receipts are expended for educational, religious, or charitable purposes when the event is held at a public facility.

Previously, when an event was held at a publicly owned facility, gross receipts exceeding $10,000 were subject to sales tax. The amendment will allow all gross receipts generated from the event to be sales and use tax exempt as long as fair market rent is paid for use of the public facility.

Statute Affected: N.D.C.C. § 57-39.2-04(4)

Effective Date: July 1, 2025

SB 2038 - DISCLOSURE OF TAX INCENTIVE INFORMATION

Senate Bill 2038 amends existing law to require that the Office of State Tax Commissioner disclose the amount of any tax exemption granted to a taxpayer to the legislative management chairman or a chairman of legislative standing committee upon request.

The bill expands the existing law which provides for similar disclosures related to tax credits and deductions claimed. The law does not allow the Tax Commissioner to disclose the taxpayer’s name or any other information that is restricted under N.D.C.C. Title 57.

Statute Affected: N.D.C.C. § 57-01-02(17)

Effective Date: Tax incentives claimed or granted after December 31, 2024

SB 2177- ANIMAL AGRICULTURE FACILITY INFRASTRUCTURE FUND

Senate Bill 2177 establishes the Animal Agriculture Facility Infrastructure Fund to support counties with qualifying animal agriculture facilities. Each year, the Tax Commissioner will certify an amount for each county based on the state portion of sales, use, or gross receipts tax paid on tangible personal property used to construct, expand, upgrade, or replace an eligible facility in the previous calendar year.

To qualify, facility owners, operators, or contractors must submit documentation by March 31 showing a minimum taxable purchase value of $300,000. Funds certified by the Tax Commissioner will be disbursed annually by the State Treasurer and must be used for infrastructure near the facility or other county needs. Total annual disbursements are capped at $500,000. If certified amounts exceed this cap, funds will be prorated among the eligible counties.

Statute Affected: N.D.C.C. Ch. 57-39.2

Effective Date: August 1, 2025