North Dakota Property Tax Relief: House Passes Competing Bills to Curb Rising Tax Burdens

“North Dakota’s House passed two bills, potentially reducing property taxes for over 770,000 residents across 53 counties.”

In a significant move to address the pressing issue of rising property tax burdens, the North Dakota House of Representatives has recently passed two competing bills aimed at providing substantial relief to property owners across the state. As we delve into the details of these groundbreaking property tax reform bills, we’ll explore their potential impact on North Dakota’s future and how they reflect the state’s commitment to creating a more equitable taxation system.

The Growing Need for Property Tax Relief in North Dakota

Property tax reform has emerged as one of the most critical subjects in the 2025 legislative session. Governor Kelly Armstrong and legislators have consistently noted that it was the primary concern voiced by voters during the 2024 election cycle. The passage of these bills represents a decisive step towards addressing these concerns and providing tangible relief to North Dakota residents.

As we analyze these legislative efforts, it’s crucial to understand the context in which they’ve been proposed. North Dakota’s property owners have been grappling with increasing tax burdens, making it challenging for many to meet their property tax obligations. The state’s commitment to addressing this issue is evident in the comprehensive nature of the proposed reforms.

House Bill 1176: Expanding the Primary Residence Tax Credit

House Bill 1176, which serves as the vehicle for Governor Armstrong’s expansive property tax reform and relief plan, has passed with a significant majority of 81-10. This bill focuses primarily on providing relief for primary residences, aiming to ease the tax burden on homeowners across North Dakota.

Key Features of House Bill 1176:

• Primary Residence Tax Credit Expansion: The bill proposes to increase the primary residence tax credit from $500 to $1,450, starting in tax year 2025. This substantial increase aims to provide immediate and significant relief to homeowners.
• Funding Sources: The proposed relief would be funded by approximately $398 million from the Legacy Fund and $74 million from the state’s General Fund, establishing a dedicated Property Tax Relief Fund.
• Homestead Tax Credit Program: The bill allocates just under $5.5 million from the General Fund to reimburse the state for the homestead tax credit program and expand eligibility criteria.
• Renter’s Refund Increase: The maximum available renter’s refund would be expanded from $400 to $600, providing additional support to renters.
• Property Tax Levy Caps: A 3% cap on property tax levy increases from taxing districts is proposed, with some exceptions for certain emergency levies and township general fund levies.

Rep. Mike Nathe, R-Bismarck, the primary sponsor of the bill, emphasized its focus on primary residences: “This bill focuses strictly on residences. Strictly on Joe Six Pack’s house. Not his lake cabin, not his land, not his ag land and commercial – none of that. Just … his home.”

House Bill 1575: A Broader Approach to Property Tax Relief

In contrast to HB 1176, House Bill 1575 takes a more comprehensive approach to property tax relief. This bill, which passed with an overwhelming majority of 86-5, aims to provide relief across multiple property classifications, including agricultural, commercial, and primary residences.

Key Features of House Bill 1575:

• Broad-Based Relief: The bill proposes a 30% reduction in property tax bills for primary residences and a 15% reduction for agricultural or commercial landowners.
• Taxable Valuation Changes: HB 1575 suggests altering how taxable valuation of property is determined, with the government covering the difference between what a taxpayer would have owed and what they pay with the lower taxable valuation.
• Local Subdivision Caps: Similar to HB 1176, this bill includes a cap on local subdivisions, limiting the increase in taxable valuation to 3% annually.
• Funding Allocation: The proposed relief would be funded by approximately $85 million from the General Fund and $398 million from the Legacy Earnings Fund.

Rep. Ty Dressler, R-Richardton, advocated for the bill’s broader approach: “House Bill 1575 provides broad-based, equitable and consistent tax relief. It addresses more than only primary residences. Ag property accounts for more than half of all property taxes collected. How can we ignore this class of property?”

“The proposed tax relief could utilize billions from North Dakota’s $7.9 billion Legacy Fund, established in 2010.”

Comparing the Two Bills: A Side-by-Side Analysis

To better understand the differences between these two significant property tax relief bills, let’s compare their key features side by side:

Features	House Bill 1176	House Bill 1575
Primary focus	Primary residences only	Agricultural, commercial, and primary residences
Tax credit expansion	Increase from $500 to $1,450 for primary residences	30% reduction for primary residences, 15% for agricultural/commercial
Caps on local taxing district levies	3% cap with some exceptions	3% cap with voter approval option
Relief for property types	Primary residences only	Agricultural, commercial, and residential
Funding source	$398M Legacy Fund, $74M General Fund	$398M Legacy Earnings Fund, $85M General Fund
Homestead tax credit eligibility	Expanded income thresholds	Similar expansion as HB 1176
Renter’s refunds	Increased from $400 to $600	Similar increase as HB 1176
Estimated total relief amount	Approximately $472 million	Approximately $483 million

This comparison highlights the different approaches taken by each bill to address the property tax burden in North Dakota. While HB 1176 focuses intensively on primary residences, HB 1575 spreads the relief across various property types, potentially benefiting a broader range of taxpayers.

Additional Property Tax Reform Efforts

In addition to the two major bills, the North Dakota legislature has been considering other property tax reform measures:

• House Bill 1168: This bill, which passed the House with a vote of 88-3, proposes shifting a certain number of mills levied by school districts to be paid by the state rather than property owners. This approach would provide relief for all property classes.
• Senate Bill 2363: Although this bill failed in a tie vote of 23-23, it aimed to provide similar relief specifically for agricultural property.

These additional efforts underscore the complexity of the property tax issue in North Dakota and the legislature’s commitment to exploring various avenues for relief.

The Role of the Legacy Fund in Property Tax Relief

A significant aspect of both major bills is the utilization of the North Dakota Legacy Fund to finance property tax relief. Established in 2010, the Legacy Fund has grown to approximately $7.9 billion, derived primarily from oil and gas revenue. The proposed use of these funds for property tax relief represents a strategic decision to leverage the state’s resources for the direct benefit of its residents.

Majority Leader Rep. Mike Lefor, R-Dickinson, emphasized the sustainability of this approach: “This is a sustainable path, using some Legacy Fund for the benefit of our kids and our grandkids. It provides long-term thinking in providing sustainable property tax relief.”

The use of the Legacy Fund for property tax relief has garnered support as a way to return value to North Dakota residents while maintaining a long-term perspective on the state’s financial health.

Potential Impact on North Dakota’s Economy and Residents

The passage of these property tax relief bills could have far-reaching implications for North Dakota’s economy and its residents:

• Increased Disposable Income: By reducing property tax burdens, homeowners and property owners may see an increase in their disposable income, potentially stimulating local economies.
• Agricultural Sector Benefits: If HB 1575 is enacted, the agricultural sector, which accounts for a significant portion of North Dakota’s economy, could see substantial relief, potentially boosting farm productivity and profitability.
• Commercial Property Incentives: The proposed relief for commercial properties could encourage business growth and expansion, potentially leading to job creation and economic development.
• Housing Market Effects: Reduced property tax burdens could make homeownership more affordable, potentially stimulating the housing market and benefiting both current and prospective homeowners.

These potential impacts highlight the broader economic implications of property tax relief beyond just individual tax savings.

Challenges and Considerations

While the proposed property tax relief measures offer significant benefits, they also present several challenges and considerations:

• Local Control Concerns: Some lawmakers have expressed concerns about the impact of these bills on local control, particularly regarding the caps on local subdivisions.
• Complexity of Implementation: The proposed changes to property tax calculations and credits may be complex to implement and communicate to taxpayers.
• Long-term Sustainability: While the use of the Legacy Fund provides immediate relief, questions remain about the long-term sustainability of this approach.
• Balancing Different Property Types: The differing approaches of HB 1176 and HB 1575 highlight the challenge of balancing relief across various property types.

Addressing these challenges will be crucial for the successful implementation of any property tax relief measure.

The Path Forward: Senate Consideration and Governor’s Approval

With the passage of these bills in the House, attention now turns to the Senate, where further debate and potential amendments are expected. Governor Kelly Armstrong has expressed gratitude for the House’s action, stating, “We appreciate the House passing property tax relief and reform, and sending it to the Senate with strong momentum. This is good news for North Dakota homeowners, and we urge senators to quickly advance a property tax package with meaningful relief and reform.”

The final shape of North Dakota’s property tax relief package will depend on the Senate’s deliberations and any potential reconciliation between the two chambers. Once a final bill is passed by both houses, it will require the governor’s signature to become law.

Implications for North Dakota’s Future

The passage of these property tax relief bills represents a significant moment in North Dakota’s fiscal policy. If enacted, these measures could add to the $1.8 billion the state has already paid toward property tax relief this biennium, potentially bringing the total amount to approximately $2.3 billion per biennium.

This substantial investment in property tax relief reflects the state’s commitment to addressing one of the most pressing concerns of its residents. It also demonstrates North Dakota’s ability to leverage its natural resource wealth, through the Legacy Fund, to provide direct benefits to its citizens.

FAQ Section

Q: When would these property tax relief measures take effect?
A: If passed and signed into law, many of the provisions, including the expanded primary residence tax credit, would take effect in tax year 2025.

Q: How do I know if I qualify for the primary residence tax credit?
A: Under the proposed bills, property owners would need to apply for the tax credit and have their property classified under a “primary residence” designation. This would require submitting an application to the Tax Department.

Q: Will these bills affect property taxes on second homes or vacation properties?
A: House Bill 1176 focuses specifically on primary residences and would not provide relief for second homes or vacation properties. House Bill 1575 takes a broader approach and may provide some relief for these properties under its commercial property provisions.

Q: How will these bills impact local government funding?
A: Both bills include provisions to cap local taxing district levy increases, which could impact local government funding. However, the bills also include state funding to offset some of these impacts.

Q: What happens if property values continue to rise rapidly?
A: Both bills include provisions to cap increases in taxable valuations, which could help mitigate the impact of rapidly rising property values on tax bills.

Conclusion

The passage of these competing property tax relief bills by the North Dakota House of Representatives marks a significant step towards addressing the rising tax burdens faced by property owners across the state. As these bills move to the Senate for consideration, North Dakota residents and policymakers alike will be watching closely to see how this crucial issue of property tax reform unfolds.

The ultimate goal of these legislative efforts is to create a more equitable and sustainable property tax system that benefits North Dakota residents while maintaining the fiscal health of local governments and the state as a whole. As the debate continues, it’s clear that property tax relief will remain at the forefront of North Dakota’s policy agenda in the coming months and years.

For those interested in staying informed about these developments and their potential impact on agriculture and land management, tools like Farmonaut’s satellite-based farm management solutions can provide valuable insights. While not directly related to property tax issues, such technologies can help landowners and farmers optimize their operations and better understand the value of their properties.

As North Dakota moves forward with these property tax reform efforts, the state is demonstrating its commitment to addressing the concerns of its citizens and creating a tax system that supports economic growth and individual prosperity. The coming weeks and months will be crucial in determining the final shape of these reforms and their long-term impact on North Dakota’s residents and economy.

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