A closer look at ND’s property and income tax cuts

BISMARCK, N.D. (KFYR) - Lawmakers passed a bipartisan tax relief package that’s being called the largest in state history by its proponents.

You’ve heard us say it a few times now: North Dakotans are getting half a billion dollars in tax cuts. But how many dollars will everyone get? And who’s going to see the most relief? Here’s the headline: the biggest winners are homeowners 65 and older.

Connie Werner is raking in the savings.

“That would practically wipe out my property taxes that I pay each and every year. So, from going from $2,800 to probably $100 in property taxes,” said Connie Werner of Bismarck.

And she wouldn’t exactly shrug off some income tax relief either.

“That would make a difference because either I can use that money to pay a bill or, better yet, I can put that money into savings for when I do retire,” said Werner.

As a homeowner whose primary residence is in North Dakota, Werner will get $500 back on her property taxes every year.

“It’s particularly beneficial to individuals living in towns like Steele, Beach, Mayville, where property values aren’t as high as a Bismarck, or a Fargo, or a Grand Forks,” said ND Tax Commissioner Brian Kroshus.

When it comes to property tax, the new law expands the Homestead Property Tax Credit for people 65 and older and creates a new primary residence property tax credit, where any homeowner in the state will get a $500 tax credit. Below is an example. If you’re 65 or older with a $400,000 house in Bismarck and you make less than $40,000 a year, right now, you’d be paying about $4,575 in property tax. With the tax cuts, you’ll be paying $1,700. That’s about $2,800 in tax relief for North Dakota seniors.

“In terms of what the program was to what it’s going to, three times the amount of money that can be accessed by seniors living in their homes,” said Kroshus.

Then there’s income tax: anyone making less than about $45,000 won’t pay state income tax, and everyone else will pay less than they’re currently paying.

“The lower income earners, now, with the new plan, get proportionately more benefits than the upper income earners do. So, I think it’s very palatable to the public in that sense. It’s very fair in how it’s approached. And just over two-thirds of the benefit will go to the lower income earners in brackets one and two,” said Kroshus.

The income tax cuts will apply to the 2023 tax year, and property tax cuts will apply to the 2024 tax year.

From the Governor’s Office, here are the new income tax brackets:

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%.

Property tax relief:

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.

Previous Coverage: Burgum signs $515 million tax cut bill

Previous Coverage: ND Legislature passes $515 million tax relief plan