Lawmakers discuss expanding property tax credit as possible ballot measure looms

Tax Commissioner Brian Kroshus speaks before members of the Tax Relief Advisory Committee about the state's homestead property tax credit on June 20, 2024. (Mary Steurer/North Dakota Monitor)

A panel of lawmakers studying tax relief policy is considering growing — or possibly even doubling — a new property tax credit.

The North Dakota primary residence tax credit, created by the 2023 Legislative assembly, allowed most North Dakota homeowners earlier this year to apply for up to $500 dollars of their 2024 property tax bill.

The Tax Relief Advisory Committee on Wednesday reviewed a bill draft brought forward by Sen. Dean Rummel, R-Dickinson, to grow that amount to $1,000.

Rummel’s proposal would also introduce some changes to the application process to make it easier for mobile home owners to access the credit.

“I think it’s important at this time to show our constituents that we’re serious about property tax reform,” he told the Tax Relief Advisory Committee.

Growing the program wouldn’t be cheap. The North Dakota Office of State Tax Commissioner estimated that this year, homeowners applied for roughly $69 million from the program.

Several lawmakers seemed interested in increasing the primary residence credit, though some were averse to the idea of expanding tax relief programs without also adopting structural reforms.

“I don’t think that’s gonna work long term,” Rep. Craig Headland, R-Montpelier, said.

Another draft discussed during the meeting would seek to remove North Dakota’s income tax marriage penalty by adjusting the state’s individual income tax brackets. The marriage penalty refers to how, under North Dakota’s current income tax structure, some taxpayers owe more in income taxes if they file as a couple than they would filing separately.

Committee members acknowledged that the state already has a marriage penalty tax credit, which the bill draft may have to be revised to accommodate.

The committee didn’t take any action on the draft during the hearing, but members generally seem to be in favor of the proposal, Committee Chair Sen. Jordan Kannianen, R-Stanley, said.

Property tax credit application closes with 138,000 households

During the meeting, Rummel expressed anxiety about drafting policies that would seek to cut income taxes with the prospective property tax ballot measure looming. Sponsors of a proposed ballot measure to eliminate property taxes based on assessed value have a June 29 deadline to get the measure on the November ballot.

“That’s a huge gorilla in our room when it comes to taxation,” he said.

The hearing also included overviews of some of North Dakota’s current tax relief initiatives, including cuts to state income taxes. Members also discussed how other property tax relief strategies, like caps on property tax increases, could be implemented and how it might affect the state.

The committee won’t be able to amend any of its work if the proposed measure passes in November, since interim committees traditionally don’t meet after October.

“Whatever happens after the election is up to the new assembly to worry about,” Kannianen said.

The Tax Relief Advisory Committee will reconvene in September.

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