2021 Special Session
The following describes the income tax legislation approved by the 2021 Legislative Assembly, in its November Special Session, and signed into law by Governor Doug Burgum. The bill text and additional information for the Special Session of 67th Legislative Assembly are available on the North Dakota Legislative Council's website.
Income Tax Legislation
HB 1515 – TAX RELIEF INCOME TAX CREDIT
House Bill 1515 passed by the 2021 North Dakota Legislature, in its November 2021 Special Session, created a tax relief income tax credit for residents of North Dakota. The credit is available only for the 2021 and 2022 tax years, after which it expires.
To be eligible for the credit, an individual must be a full-year resident of North Dakota for the tax year. Because full-year residency is the only qualifying condition, the credit is allowed to all full-year resident filers who have a tax liability (before any credits) on their North Dakota income tax return. For filers with a filing status of single, head of household, qualifying widow(er), or married filing separately, the credit is $350. For married persons filing jointly, both of whom are full-year residents, the credit is $700.
In the case of married persons filing jointly, where one spouse is a full-year resident of North Dakota and the other spouse is a nonresident of North Dakota for part or all of the year, a $350 credit is allowed. Also, if an otherwise full-year resident dies during the tax year, the credit is allowed on the final return filed for the deceased taxpayer.
The 2021 Form ND-1 was revised to include the new credit on page 2, line 20. If the credit exceeds the tax (before tax credits) on the return, the excess credit is not refundable and cannot be carried over and used in any other tax year.
North Dakota’s short form, Form ND-EZ, is for full-year residents of North Dakota who have no state adjustments to income and no state income tax credits. Therefore, the credit is not available on Form ND-EZ. Any full-year resident who has a tax liability (before tax credits) must use Form ND-1 to get the credit. Individuals who, except for the new credit, would qualify to use Form ND-EZ may still use it if their North Dakota taxable income and tax are zero.
Statutory change: Creates new section to N.D.C.C. ch. 57-38 and new subdivision to subsection 7 of N.D.C.C § 57-38-30.3.
Effective date: Effective for first two taxable years beginning on or after January 1, 2021, and is ineffective thereafter.
SB 2351 – SOCIAL SECURITY BENEFIT EXCLUSION
For tax years 2019 and 2020, eligible individuals were allowed to deduct the taxable part of their social security benefits from North Dakota taxable income. Eligibility for the deduction was limited to individuals with an adjusted gross income of $50,000 or less (or $100,000 or less, if married filing jointly).
Senate Bill 2351 passed by the 2021 North Dakota Legislature, in its November 2021 Special Session, changed the law to remove the adjusted gross income threshold. This change allows the deduction to all individuals, regardless of the amount of their adjusted gross income. This change applies to tax years 2021 and after. For 2021, the deduction is claimed on Form ND-1, line 15.
Statutory change: Amends N.D.C.C. §§ 57-38-01.28(4) and 57-38-30.3(2)(t).
Effective date: Taxable years beginning on or after January 1, 2021.