Once again another busy session in Bismarck offers legislators the chance to reduce, and potentially eliminate North Dakota’s income tax, as the House has advanced tax relief legislation in HB 1380.

With their southern neighbors having no income tax, North Dakota stands out as a state that has the opportunity and ability to eliminate their tax. The state’s Legacy Fund, which holds revenues from energy industry growth, contains money that lawmakers are still deciding how to use.

One sensible use would be to eliminate the state income tax.

In 2019, a bill to do just that passed the House but failed to get through the Senate. This session, HB 1380 would put Legacy Fund dollars toward reducing the individual income tax, as well as the corporate income tax. Legacy Fund earnings that are beyond what is designated for the legacy earnings fund, and various funds, would go towards strategic investments, back to the Legacy Fund, and toward tax relief for individuals and businesses. This approach might prove more popular with the Senate.

While exact estimates are not available, the Legacy Fund has grown to nearly $8 billion and the state estimates around $390 million in 2021 from income taxes. Given that, HB 1380 would result in significant tax reductions and could ultimately mean the elimination of the income tax.

More progress on income tax reform is welcome in North Dakota, and the House has been leading the way.

States without income taxes have been in the headlines in the past year as residents from higher tax states flee to friendlier environments. Tennessee, Florida, and Texas were tops for incoming moves in U-Haul’s 2020 study.

North Dakota can join the nine states with no income tax, including South Dakota, by taking aggressive action to reduce tax burdens with HB 1380. It can also keep up with eight other states that are considering eliminating their income taxes this year.

HB 1380 is sponsored by Representatives Lefor, Bosch, Dockter, Headland, Howe, Nathe, Porter, Matt Ruby, and Vicky Steiner in the House; and Senators Patten, Sorvaag, Wardner in the Senate.