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Income tax reduction proposed in special session

A bill to reduce the North Dakota income taxes by 15% has been introduced by Rep. Craig Headland, R-Montpelier, for the upcoming special session of the North Dakota Legislature.

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A bill to reduce the North Dakota income tax that failed in the last legislative session may get another review during the special session planned for next week, according to Rep. Craig Headland, R-Montpelier.

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

"It is not exactly the same bill that was considered last spring," he said, referring to triggers built into the original bill based on the fund balances in the North Dakota State Treasury at the end of the fiscal year. "... it is a straight 15% tax cut."

The bill is one of nearly 40 bills introduced for the special session that begins Monday, Nov. 8. Rep. Chet Pollert, R-Carrington, and House majority leader, said the bill would need to be approved by the delayed bills committee in order to be considered during the session.

Headland said he had brought the bill to the special session as a way to get money back to North Dakota residents.


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

The plan would reduce state revenue by $150 million, according to estimates made by the North Dakota Office of State Tax Commissioner.

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

"It is likely we are hitting that trigger," Headland said. "I didn't think the timing is good for that."

Headland said oil production in North Dakota has not returned to the prepandemic levels and an increase in tax could slow that recovery.

The special session version of the income tax reduction bill may suffer the same fate as the regular session bill this spring.

"Not hearing a lot of support, especially out of the Senate," Headland said. "The concern is they feel we don't have time to vet it in a special session."

The special session has no length limit set in law, but Pollert has expressed a desire to wrap up business in a week. Legislators will need to approve a redistricting plan based on the 2020 U.S. Census and devise a spending plan for federal money provided to the state of North Dakota under the American Rescue Plan Act.


Headland vowed to bring up the tax decrease again if it fails in the special session.

"We think North Dakotans are looking for something," he said. "This works towards the elimination of income tax. It will be back."

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