North Dakota Legislators Provide Tax Breaks

NEWS

FOR IMMEDIATE RELEASE

December 15, 2009



Contact: Don Canton

(701) 328-2200

Beth Boustead

N.D. Tax Commissioner’s Office

(701) 328-3039



HOEVEN, FONG: TAXPAYERS TO SEE SUBSTANTIAL REDUCTIONS IN PROPERTY AND INCOME TAXES THIS YEAR



BISMARCK, ND – As residents and businesses are receiving their property tax statements this month, Gov. John Hoeven, Tax Commissioner Cory Fong and state legislators were on hand in Bismarck and Fargo to discuss the state’s new $400 million tax relief and reform plan.



The group answered questions about the plan’s mechanics, and described what taxpayers can expect to see on their new property tax statements and income tax forms. Hoeven, Fong and legislators worked together to pass the plan in the last legislative session.



The comprehensive tax relief package includes:



Property Tax Relief and Reform: $295 Million

Homestead Tax Credit $ 5 Million

Individual Income Tax Relief: $ 90 Million

Business Income Tax Relief $ 10 Million

$400 Million



What that will mean for the average North Dakota taxpayer is a combined property and income tax saving this year of about $650, according to Hoeven and Fong. Seniors and persons with disabilities who own property or rent could see additional savings on top of that from an expanded Homestead Property Tax program.



“Our work to grow and diversify our economy has given us the resources to implement a substantial tax relief and reform package for the people of North Dakota,” Hoeven said. “The plan will both help our working families and enhance our business competitiveness during a period of national recession.”



“North Dakota is one of a handful of states that have been able to withstand and weather the recession,” said Fong. “While other state governors and legislatures are looking for ways to raise revenue through raising taxes and cutting services, we just came through a historic session of funding both our important priorities and substantial tax relief.”



PROPERTY TAX RELIEF



Property taxpayers this year will see an average reduction of between 15 and 19 percent directly on their tax bills, after city and county levies for local needs, and depending on the local school district. Unlike the 2007 tax relief plan, which took the form of a tax credit on the state income tax form, this time taxpayers will see a direct reduction in their property taxes of up to 75 mills in their school district’s general fund levy, as well as a reduction in the school district’s general fund levy cap from 185 mills to 110 mills. As a result, this will boost the state's share of local education funding from 49 percent to 72 percent.



Average Savings



House True and Full Value $150,000 Saving $506

Small Business True and Full Value $500,000 Saving $1,875

1300 Acre Farm or Ranch True and Full Value $318,000 Saving $1,193



INCOME TAX RELIEF



Income taxpayers will no longer see the property tax credit passed in 2007 on this year’s state income tax forms, but they will see a reduction in their taxes owing to the new tax relief and reform package.



Individual - $90 Million



Individuals will see an average reduction of 12 percent in their individual income taxes. The new tax tables will reflect a drop in the bottom rate to 1.84 percent, and a drop in the top rate to 4.86 percent.



Business - $10 Million



Business owners will see lower rates and the elimination of two of the state’s five business tax brackets on this year’s tax tables. The bottom rate drops to 2.1 percent, and the top rate drops to 6.4 percent.



RELIEF AND REFORM



The new plan both reduces and simplifies the state’s taxes, according to Hoeven and Fong.



“These measures provide the kind of relief that North Dakotans have wanted, needed, and deserve – it is direct, meaningful, and easy to understand,” said Fong.



“By permanently reducing mills for property taxes, and by reducing rates and the number of brackets for income taxes, we are truly reforming our tax structure, while enhancing our competitiveness and fairness,” Hoeven said. “The winners are families, businesses and the State of North Dakota.”



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