The state best positioned to eliminate its income tax next is North Dakota.
The state’s economic growth, thriving energy sector, and the multi-billion-dollar Legacy Fund energy revenues have built up combine to create a great environment to eliminate the income tax.
In 2023, the state took major steps down the path to zero income tax, making sweeping changes to its tax code. Notably, North Dakota reduced its five income tax brackets to two, and capped the top rate at 2.5%, making it an exceptionally competitive state.
These measures have saved taxpayers more than $358 million in 2023 and will continue to be driving factors in economic growth. As Burgum enters his final term as Governor, he again called for the elimination of the state’s income tax.
In his State of the State address, Governor Burgum said that “[the state has] taken incremental steps for far too long. It is time [to] say goodbye to the state income tax.”
North Dakota currently has over $1.3 billion in reserves, seven times the amount the state had when Burgum took office back in 2016, and general fund revenues that are exceeding its forecasts by 11%, totaling to more than $154 million. With these readily available funds and an excess of revenue surplus, North Dakota has a golden opportunity to advance and accelerate permanent tax relief.
Unlike most states in the nation, the income tax contributes to less than one-tenth of North Dakota’s general revenues. Taxpayers are overpaying for their government. The now $9 billion “Legacy Fund,” tied to oil and gas revenues, is meant to help the state maintain budget stability, which gives the state plenty of flexibility to pursue its goals. With this array of resources available to make meaningful change, cutting the income tax has never been easier, nor more feasible than now.
Thanks to the fiscally responsible leadership of Burgum and the Republican legislature, North Dakota is more than capable of becoming the 10th state to eliminate its individual state income tax burden. Citizens of the Roughrider State deserve to keep their hard earned dollars. Burgum noted that “the time is now to tell our citizens, your money belongs in your pockets.” The path to zero income tax is the way to ensure that this happens.