2015 Legislative Session Update: Tax Relief, Tax Law Changes
& Tax Credits and Exemptions June 25, 2015 Ryan Rauschenberger
Tax Commissioner
Slide 2
Tax Relief Individual Income 2015 SB2349 Reduced rates in all
brackets by 10% Will save ND taxpayers an estimated $87 million
over the next two years
Slide 3
Tax Reduction for Typical Family
Slide 4
Tax Relief Corporate 2015 SB2349 Reduced rates in all brackets
by 5% Saves ND corporate taxpayers an estimated $21 million over
the next two years
Slide 5
Tax Relief Corporate Since 2009 Brackets consolidated and rates
reduced The top rate reduced by over 30%, from 6.5% in 2008 to
4.31% for tax years beginning with 2015 Cumulative savings for ND
corporate taxpayers from 2009 through 2016 is over $250
million
Slide 6
Tax Relief Property (School Funding) 2015 SB2013; SB2031 $1.9
billion state appropriation for integrated formula payments to
schools during 2015-17 Estimated savings to local property tax
payers of over $950 million during fiscal years 2016 and 2017 based
on reduction in school mill levies Actual school district general
fund levies have declined from 190.55 in 2008-09 to 67.93 in
2014-15
Slide 7
Tax Relief Property (12% Credit) 2015 SB2005 Provides a $250
million appropriation to the State Treasurer for property tax
credit payments to counties 2015 HB1059 Makes permanent the
state-paid 12% property tax credit program by removing the
statutory sunset Includes transmission line per mile taxes in the
12% credit Estimated to provide $2.4 million tax relief for RECs
during 2015-17
Slide 8
Tax Relief Property (County Social Services Costs) SB2206
Provides for state assumption of certain county social services
costs, beginning January 1, 2016 Reduced county mill levies
expected to save property tax payers $23.2 million during the 2015-
17 biennium
Slide 9
Tax Relief - Total Estimated Cumulative Tax Relief Since 2009:
Individual income tax = $1.2 billion Corporate income tax = $250
million Property tax = $2.7 billion Total = $4.2 billion
Slide 10
Other Tax Changes 2015 Session New optional corporate income
apportionment method Royalty withholding changes New and expanded
tax credits and exemptions
Slide 11
Corporate Income Apportionment SB 2292 Creates an optional
income apportionment methodology Binding for 5 years Uses double
weighted sales factor for 2016 and 2017 Uses 6-times weighted sales
factor for 2018 Uses a single sales factor beginning with 2019
Anticipated to save corporate taxpayers $15 million in 2016 and as
much as $60 million per year when fully phased in
Slide 12
Tax Credits HB 1014 Housing incentive fund income tax credit
Extends program for two more years effective for 2015 and 2016 tax
years Increases total credits allowed under program from $20
million to $30 million Credit = Amount contributed
Slide 13
Tax Credits HB 1133 Research income tax credit Current state
law is dependent on definitions contained in the federal research
tax credit law This bill adds language to state law that takes
effect if the federal research credit is repealed The new language
uses the federal research credit definitions for the most recent
year the federal credit was in effect
Slide 14
Tax Credits HB 1228 / SB 2037 Corporation wind energy device
income tax credit HB 1228 extends the unused credit carryover
period from 20 years to 30 years, but only for devices installed
after 9/30/2008 and before 1/1/2012 SB 2037 extends the sunset date
to 1/1/2017, but only if the construction of the device began
before 1/1/2015
Slide 15
Tax Credits HB 1228 / SB 2037 Corporation wind energy device
income tax credit Important: Except for the change made for certain
wind devices in SB 2037, the energy device income tax credit
expired on 1/1/2015 Corporations: Applies to all types of devices
Individuals: Applies to geothermal devices
Slide 16
Tax Credits SB 2329 Renaissance zone tax incentives Maximum
zone size increased from 23 to 34 blocks For city with population
> 5,000, the zone size may be increased by 1 block for each
additional 5,000 people, up to maximum size of 49 blocks Allows
latest federal census estimate may be used for this purpose
Slide 17
Tax Credits SB 2329 Renaissance zone tax incentives Maximum
amount of income tax credits allowed under program for investments
in a renaissance fund organization increased from $8.5 million to
$10 million
Slide 18
Tax Credits SB 2340 Automation income tax credit Extends credit
two additional years through 2017 tax year, after which it expires
Effective for 2015, 2016, and 2017 tax years Allows credit for
acquisition via capital lease Credit = 20% of qualifying
acquisitions
Slide 19
Tax Credits SB 2340 Automation income tax credit Total credits
allowed per year limited to: $2 million for 2015 calendar year
$500,000 for 2016 and 2017 calendar years
Slide 20
Tax Credits SB 2340 Automation income tax credit Unclaimed
credits under annual cap are added to the following years annual
cap If total credits claimed exceed annual cap, the allowable
credits under the cap must be prorated among claimants
Slide 21
Sales Tax Exemptions HB1089 Sales tax exemption for qualifying
data centers Applies to purchases of enterprise IT equipment and
software, including replacement equipment Limited to first four
data centers approved Data center must be at least 16,000 square
feet and meet other requirements
Slide 22
Sales Tax Exemptions HB1089 Sales tax exemption for qualifying
data centers Retroactively applies to taxable events occurring
after December 31, 2014 Effective only through December 31,
2020
Slide 23
Sales Tax Exemptions SB 2035 Sales tax exemption for fertilizer
or chemical processing facility Includes materials used to
construct facility Includes components integral to the plants
operation Must be located at the plant site but may be owned by an
unrelated party
Slide 24
Sales Tax Exemptions SB 2035 Sales tax exemption for fertilizer
or chemical processing facility Eligible facilities are plants that
produce fertilizer, chemical, or chemical derivatives from natural
gas, natural gas liquids, or crude oil components Plant owner must
receive Dept. of Health air quality permit by June 30, 2019
Slide 25
Sales Tax Exemptions SB 2318 Sales tax exemption for CO2
enhanced recovery Applies to materials used to construct or expand
a system to compress, gather, collect, store, transport, or inject
CO2 for use in enhanced recovery of oil or natural gas Effective
July 1, 2015
Slide 26
Property Tax Exemptions SB 2318 Property tax exemption for CO2
capture system Applies to any CO2 capture system located at a coal
conversion facility used for enhanced recovery of oil or natural
gas Must be classified as personal property and is exempt from all
ad valorem taxes
Slide 27
Questions? May 15, 2015 Ryan Rauschenberger Tax
Commissioner