Major property tax bill clears committee with flexibility on caps

BISMARCK, N.D. (North Dakota Monitor) — A nearly $500 million property tax overhaul championed by the governor cleared its first hurdle Thursday in the North Dakota House.

House Bill 1176 is based on a plan proposed by Gov. Kelly Armstrong earlier this year to roughly triple a property tax credit for homeowners.

The bill would cap annual property tax increases for local governments at 3% each year. The program would be funded in part with earnings from the state’s Legacy Fund.

The House Finance and Taxation Committee voted 12-2 Thursday evening to forward the bill to the House Appropriations Committee.

Rep. Ty Dressler, R-Richardton, and Rep. Dennis Nehring, R-Williston, were the only no votes.

The bill, as amended Thursday by the committee, is estimated to cost the state about $473 million for the 2025-27 budget cycle, according to committee chair Rep. Craig Headland, R-Montpelier.

The primary residence tax credit was introduced in 2023 as a property tax discount for most North Dakota homeowners.

As originally written, the bill would have increased the state’s primary residence tax credit from  $500 to $1,550 for the first year. Thursday’s amendment slightly lowered that figure to $1,450.

The bill, which is sponsored by Rep. Mike Nathe, R-Bismarck, received pushback from some cities and counties about the 3% cap.

Under the  proposal, local governments would be able to “bank” unused property tax increases for up to five years.

Thursday’s changes suggested by Headland provide more flexibility to cities and governments with respect to the property tax caps, as well — including allowing them to seek permission from voters to opt out of the caps for 10 years at a time.

The amendment also eliminates income taxes for single filers who make up to roughly $54,000 a year, expanding on income tax cuts lawmakers made two years ago. For married taxpayers, that level would increase to nearly $90,000.

Reps. Zac Ista, D-Grand Forks, and Austin Foss, D-Fargo, voted against Headland’s amendment. During discussion on the amendment, Ista indicated opposition to the income tax cuts.

Some agriculture groups had advocated for property tax cuts for farmers and ranchers. The amended bill does not address that, but the committee is considering other proposals as well, Headland said.

If the bill is approved by the House Appropriations Committee, then it will go to the full House chamber for a vote.

The House Finance and Taxation Committee will consider additional property tax proposals on Monday, Headland said.

Armstrong said earlier this year he wants to eliminate property taxes for most homeowners within the next 10 years. His goal is for the program to become self-sustaining by using Legacy Fund earnings, eventually eliminating reliance on the state’s general fund.

(Story written by Mary Steurer – North Dakota Monitor)