Prepared for Representative Ista

LC# 23.9450.02000
January 2023

ESTIMATED INCOME TAX RELIEF -

2023-25 BIENNIUM EXECUTIVE BUDGET
EXECUTIVE BUDGET INCOME TAX RELIEF PROPOSAL
The schedule below provides information on the estimated fiscal impact of the income tax relief proposal as
recommended in the executive budget for the 2023-25 biennium. The proposal exempts taxable income in the first
tax bracket from taxation and implements a flat tax of 1.5 percent for all taxable income exceeding the first bracket.
The income tax relief would result in a decrease in tax collections reducing general fund revenues for the
2023-25 biennium. The amounts reflect information provided by the Tax Department.
Total Estimated Average Annual
Tax Relief - Biennium Tax Relief per Return
Tax Bracket Residents Nonresidents Total Residents Nonresidents
First $96,650,000 $7,580,000 $104,230,000 $219 $77
Second 161,850,000 12,550,000 174,400,000 $780 $225
Third 47,620,000 6,130,000 53,750,000 $1,353 $352
Fourth 38,790,000 7,030,000 45,820,000 $2,607 $468
Fifth 143,890,000 44,310,000 188,200,000 $36,119 $2,102
Total $488,800,000 $77,600,000 $566,400,000

INCOME TAX CREDIT - COST TO CONTINUE

The schedule below provides information on the estimated cost to continue the income tax credit, which was
approved during the November 2021 special legislative session, for the 2023-25 biennium. The credit provides up
to $700 per tax return for married filing jointly returns and up to $350 per tax return for all other returns. The income
tax credit would result in a decrease in tax collections reducing general fund revenues for the 2023-25 biennium.
For reference, the estimated tax relief for the credit in the 2021-23 biennium was $211 million. The amounts shown
reflect information provided by the Tax Department.
Total Estimated Average Annual
Tax Relief - Biennium Tax Relief per Return
Tax Bracket Residents Nonresidents Total Residents Nonresidents
First $91,040,000 $0 $91,040,000 $198 $0
Second 105,160,000 0 105,160,000 $415 $0
Third 18,870,000 0 18,870,000 $419 $0
Fourth 8,470,000 0 8,470,000 $417 $0
Fifth 5,170,000 0 5,170,000 $418 $0
Total $228,710,000 $0 $228,710,000

RESIDENT AND NONRESIDENT INCOME TAX RETURNS AND LIABILITY

The schedule below provides information on the estimated tax liability and tax returns for the 2023-25 biennium
based on residents and nonresidents. The total estimated tax liability reflects the executive budget forecast with
adjustments for the automation income tax credit and income tax relief proposal.
Estimated Number of Tax Returns - Biennium Estimated Tax Liability - Biennium
Tax Bracket Residents Nonresidents Total Residents Nonresidents Total
First 221,000 58,000 279,000 $116,330,000 $9,210,000 $125,540,000
Second 95,000 29,000 124,000 297,150,000 24,190,000 321,340,000
Third 17,000 10,000 27,000 126,690,000 17,280,000 143,970,000
Fourth 7,000 7,000 14,000 107,110,000 19,580,000 126,690,000
Fifth 4,000 10,000 14,000 322,490,000 111,720,000 434,210,000
Total 344,000 114,000 458,000 $969,770,000 $181,980,000 $1,151,750,000
23.9450.02000

INCOME TAX BRACKETS

The schedule below provides information on the estimated income brackets for the 2023-25 biennium based on
information provided by the Tax Department.
Annual Taxable Income Over
Single Married Filing Married Filing Head of Qualifying
Tax Tax Rate Filer Jointly Separately Household Widow(er)
Bracket (Current Law) Return Return Return Return Return
First 1.10% $0 $0 $0 $0 $0
Second 2.04% $44,725 $74,750 $37,375 $59,950 $74,750
Third 2.27% $108,325 $180,550 $90,275 $154,750 $180,550
Fourth 2.64% $225,975 $275,100 $137,550 $250,550 $275,100
Fifth 2.90% $491,350 $491,350 $245,675 $491,350 $491,350

North Dakota Legislative Council 2 January 2023