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North Dakota House Bill HB1295

North Dakota 2025-2026 Regular Session

North Dakota House Bill HB1295 Compare Versions

Only one version of the bill is available at this time.
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11 25.0948.01000
22 Sixty-ninth
33 Legislative Assembly
44 of North Dakota
55 Introduced by
66 Representatives S. Olson, Heilman, D. Johnston, Kasper, Maki, Toman, Nehring
77 Senators Enget, Magrum
88 A BILL for an Act to amend and reenact subsection 3 of section 54-35-26 and sections
99 57-40.2-03.3 and 57-60-06 of the North Dakota Century Code, relating to the evaluation of
1010 economic development tax incentives, the carbon dioxide capture and injection use tax
1111 exemption, and the ad valorem property tax exemption for carbon dioxide capture equipment
1212 used for enhanced oil recovery and secure geologic storage; to repeal sections 57-06-17.1,
1313 57-06-17.2, and 57-39.2-04.14 of the North Dakota Century Code, relating to the carbon dioxide
1414 pipeline exemption, payments in lieu of taxes for certain carbon dioxide pipeline property, and
1515 the carbon dioxide capture and injection sales tax exemption; and to provide an effective date.
1616 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
1717 SECTION 1. AMENDMENT. Subsection 3 of section 54-35-26 of the North Dakota Century
1818 Code is amended and reenacted as follows:
1919 3.The legislative management interim committee assigned the study responsibility under
2020 this section may examine economic development tax incentives, shall complete
2121 analysis of the incentives it designates for analysis during the interim, and shall
2222 approve a plan to provide that each of the economic development tax incentives listed
2323 in this subsection is subject to a complete analysis within each six-year period. The
2424 interim committee may include in its recommendations any amendments to this
2525 section, including amendments to add or remove incentives from the list of incentives
2626 subject to analysis under this subsection. Analysis must be completed for economic
2727 development tax incentives, including each of the following:
2828 a.Renaissance zone credits and exemptions.
2929 b.Research expense credit.
3030 c.Agricultural commodity processing facility investment credit.
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3232 HOUSE BILL NO. 1295
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5858 d.Biodiesel fuel production facility construction or retrofit credit, biodiesel fuel
5959 blending credit, and biodiesel fuel equipment credit.
6060 e.Seed capital investment credit.
6161 f.Internship program credit.
6262 g.Angel fund investment credit.
6363 h.Workforce recruitment credit.
6464 i.Soybean or canola crushing facility construction or retrofit credit.
6565 j.Twenty-first century manufacturing and animal agricultural workforce incentive.
6666 k.New or expanding business exemption.
6767 l.Manufacturing and recycling equipment sales tax exemption.
6868 m.Coal severance and conversion tax exemptions.
6969 n.Oil and gas gross production and oil extraction tax exemptions.
7070 o.Fuel tax refunds for certain users.
7171 p.New jobs credit from income tax withholding.
7272 q.Development or renewal area incentives.
7373 r.Sales and use tax exemption for materials used to construct a fertilizer or
7474 chemical processing facility.
7575 s.Sales and use tax exemption for materials used in compressing, gathering,
7676 collecting, storing, transporting, or injecting carbon dioxide for use in enhanced
7777 recovery of oil or natural gas.
7878 t.Sales and use tax exemption for enterprise information technology equipment
7979 and computer software used in a qualified data center.
8080 u.t.Sales and use tax exemption for raw materials, single-use product contact
8181 systems, and reagents used for biologic manufacturing.
8282 v.u.Sales and use tax exemption for materials used to construct or expand a coal
8383 processing facility that utilizes coal as a feedstock.
8484 SECTION 2. AMENDMENT. Section 57-40.2-03.3 of the North Dakota Century Code is
8585 amended and reenacted as follows:
8686 57-40.2-03.3. Use tax on contractors. (Effective through June 30, 2025)
8787 1.When a contractor or subcontractor uses tangible personal property in the
8888 performance of that person's contract, or to fulfill contract or subcontract obligations,
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122122 whether the title to the property be in the contractor, subcontractor, contractee,
123123 subcontractee, or any other person, or whether the titleholder of the property would be
124124 subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
125125 at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
126126 market value of such property, whichever is greater, unless the property has been
127127 previously subjected to a sales tax or use tax by this state, and the tax due has been
128128 paid. This section does not apply to a contractor or subcontractor that does not enter a
129129 contract for the purchase of the tangible personal property.
130130 2.The provisions of this chapter pertaining to the administration of the tax imposed by
131131 section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
132132 administration of the tax levied by this section.
133133 3.The tax imposed by this section does not apply to:
134134 a.Production equipment or tangible personal property as authorized or approved
135135 for exemption by the tax commissioner under section 57-39.2-04.2.
136136 b.Machinery, equipment, or other tangible personal property used to construct an
137137 agricultural commodity processing facility as authorized or approved for
138138 exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4.
139139 c.Tangible personal property used to construct or expand a system used to
140140 compress, process, gather, or refine gas recovered from an oil or gas well in this
141141 state or used to expand or build a gas-processing facility in this state as
142142 authorized or approved for exemption by the tax commissioner under section
143143 57-39.2-04.5.
144144 d.Tangible personal property used to construct or expand a qualifying oil refinery as
145145 authorized or approved for exemption by the tax commissioner under section
146146 57-39.2-04.6.
147147 e.Tangible personal property used to construct or expand a qualifying facility as
148148 authorized or approved for exemption by the tax commissioner under section
149149 57-39.2-04.10.
150150 f.Tangible personal property used to construct or expand a qualifying facility as
151151 authorized or approved for exemption by the tax commissioner under section
152152 57-39.2-04.11.
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186186 g.Materials used in compressing, gathering, collecting, storing, transporting, or
187187 injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
188188 provided in section 57-39.2-04.14.
189189 h.Tangible personal property used to construct a qualifying fertilizer or chemical
190190 processing facility as authorized or approved for exemption by the tax
191191 commissioner under section 57-39.2-04.15.
192192 i.h.Tangible personal property used to construct a qualified straddle plant, a qualified
193193 fractionator, or qualified associated infrastructure as authorized or approved for
194194 exemption by the tax commissioner under section 57-39.2-04.16.
195195 j.i.Tangible personal property as authorized or approved for exemption by the
196196 tax commissioner as provided in section 57-39.2-04.21.
197197 k.j.Tangible personal property as authorized or approved for exemption by the
198198 tax commissioner as provided in section 57-39.2-04.20.
199199 l.k.Raw materials, single-use product contact systems, and reagents used for
200200 biologic manufacturing as authorized or approved for exemption by the
201201 tax commissioner under section 57-39.2-04.19.
202202 m.l.Tangible personal property used to construct, expand, or upgrade a facility that
203203 refines renewable feedstock into sustainable aviation fuel as authorized or
204204 approved by the tax commissioner under section 57-39.2-04.18.
205205 Use tax on contractors. (Effective after June 30, 2025, and through June 30, 2029)
206206 1.When a contractor or subcontractor uses tangible personal property in the
207207 performance of that person's contract, or to fulfill contract or subcontract obligations,
208208 whether the title to the property be in the contractor, subcontractor, contractee,
209209 subcontractee, or any other person, or whether the titleholder of the property would be
210210 subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
211211 at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
212212 market value of such property, whichever is greater, unless the property has been
213213 previously subjected to a sales tax or use tax by this state, and the tax due has been
214214 paid. This section does not apply to a contractor or subcontractor that does not enter a
215215 contract for the purchase of the tangible personal property.
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248248 2.The provisions of this chapter pertaining to the administration of the tax imposed by
249249 section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
250250 administration of the tax levied by this section.
251251 3.The tax imposed by this section does not apply to:
252252 a.Production equipment or tangible personal property as authorized or approved
253253 for exemption by the tax commissioner under section 57-39.2-04.2;
254254 b.Machinery, equipment, or other tangible personal property used to construct an
255255 agricultural commodity processing facility as authorized or approved for
256256 exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;
257257 c.Tangible personal property used to construct or expand a system used to
258258 compress, process, gather, or refine gas recovered from an oil or gas well in this
259259 state or used to expand or build a gas-processing facility in this state as
260260 authorized or approved for exemption by the tax commissioner under section
261261 57-39.2-04.5;
262262 d.Tangible personal property used to construct or expand a qualifying oil refinery as
263263 authorized or approved for exemption by the tax commissioner under section
264264 57-39.2-04.6;
265265 e.Tangible personal property used to construct or expand a qualifying facility as
266266 authorized or approved for exemption by the tax commissioner under section
267267 57-39.2-04.10;
268268 f.Tangible personal property used to construct or expand a qualifying facility as
269269 authorized or approved for exemption by the tax commissioner under section
270270 57-39.2-04.11;
271271 g.Materials used in compressing, gathering, collecting, storing, transporting, or
272272 injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
273273 provided in section 57-39.2-04.14;
274274 h.Tangible personal property used to construct a qualifying fertilizer or chemical
275275 processing facility as authorized or approved for exemption by the tax
276276 commissioner under section 57-39.2-04.15; or
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308308 i.h.Tangible personal property used to construct a qualified straddle plant, a qualified
309309 fractionator, or qualified associated infrastructure as authorized or approved for
310310 exemption by the tax commissioner under section 57-39.2-04.16.
311311 j.i.Tangible personal property as authorized or approved for exemption by the
312312 tax commissioner as provided in section 57-39.2-04.21.
313313 k.j.Tangible personal property as authorized or approved for exemption by the
314314 tax commissioner as provided in section 57-39.2-04.20.
315315 l.k.Raw materials, single-use product contact systems, and reagents used for
316316 biologic manufacturing as authorized or approved for exemption by the
317317 tax commissioner under section 57-39.2-04.19.
318318 Use tax on contractors. (Effective after June 30, 2029)
319319 1.When a contractor or subcontractor uses tangible personal property in the
320320 performance of that person's contract, or to fulfill contract or subcontract obligations,
321321 whether the title to the property be in the contractor, subcontractor, contractee,
322322 subcontractee, or any other person, or whether the titleholder of the property would be
323323 subject to pay the sales or use tax, the contractor or subcontractor shall pay a use tax
324324 at the rate prescribed by section 57-40.2-02.1 measured by the purchase price or fair
325325 market value of such property, whichever is greater, unless the property has been
326326 previously subjected to a sales tax or use tax by this state, and the tax due has been
327327 paid. This section does not apply to a contractor or subcontractor that does not enter a
328328 contract for the purchase of the tangible personal property.
329329 2.The provisions of this chapter pertaining to the administration of the tax imposed by
330330 section 57-40.2-02.1, not in conflict with the provisions of this section, govern the
331331 administration of the tax levied by this section.
332332 3.The tax imposed by this section does not apply to:
333333 a.Production equipment or tangible personal property as authorized or approved
334334 for exemption by the tax commissioner under section 57-39.2-04.2;
335335 b.Machinery, equipment, or other tangible personal property used to construct an
336336 agricultural commodity processing facility as authorized or approved for
337337 exemption by the tax commissioner under section 57-39.2-04.3 or 57-39.2-04.4;
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370370 c.Tangible personal property used to construct or expand a system used to
371371 compress, process, gather, or refine gas recovered from an oil or gas well in this
372372 state or used to expand or build a gas-processing facility in this state as
373373 authorized or approved for exemption by the tax commissioner under section
374374 57-39.2-04.5;
375375 d.Tangible personal property used to construct or expand a qualifying oil refinery as
376376 authorized or approved for exemption by the tax commissioner under section
377377 57-39.2-04.6;
378378 e.Tangible personal property used to construct or expand a qualifying facility as
379379 authorized or approved for exemption by the tax commissioner under section
380380 57-39.2-04.10;
381381 f.Tangible personal property used to construct or expand a qualifying facility as
382382 authorized or approved for exemption by the tax commissioner under section
383383 57-39.2-04.11;
384384 g.Materials used in compressing, gathering, collecting, storing, transporting, or
385385 injecting carbon dioxide for use in enhanced recovery of oil or natural gas as
386386 provided in section 57-39.2-04.14;
387387 h.Tangible personal property used to construct a qualifying fertilizer or chemical
388388 processing facility as authorized or approved for exemption by the tax
389389 commissioner under section 57-39.2-04.15; or
390390 i.h.Tangible personal property used to construct a qualified straddle plant, a qualified
391391 fractionator, or qualified associated infrastructure as authorized or approved for
392392 exemption by the tax commissioner under section 57-39.2-04.16.
393393 j.i.Tangible personal property as authorized or approved for exemption by the
394394 tax commissioner as provided in section 57-39.2-04.21.
395395 k.j.Tangible personal property as authorized or approved for exemption by the
396396 tax commissioner as provided in section 57-39.2-04.20.
397397 SECTION 3. AMENDMENT. Section 57-60-06 of the North Dakota Century Code is
398398 amended and reenacted as follows:
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430430 57-60-06. Property classified and exempted from ad valorem taxes - In lieu of certain
431431 other taxes - Credit for certain other taxes.
432432 Each coal conversion facility and any carbon dioxide capture system located at the coal
433433 conversion facility, and any equipment directly used for secure geologic storage of carbon
434434 dioxide or enhanced recovery of oil or natural gas must be classified as personal property and
435435 is exempt from all ad valorem taxes except for taxes on the land on which the facility, capture
436436 system, or equipment is located. The exemption provided by this section may not be interpreted
437437 to apply to tangible personal property incorporated as a component part of a carbon dioxide
438438 pipeline but this restriction does not affect eligibility of such a pipeline for the exemption under
439439 section 57-06-17.1. The taxes imposed by this chapter are in lieu of ad valorem taxes on the
440440 property so classified as personal property.
441441 SECTION 4. REPEAL. Sections 57-06-17.1 and 57-06-17.2 of the North Dakota Century
442442 Code are repealed.
443443 SECTION 5. REPEAL. Section 57-39.2-04.14 of the North Dakota Century Code is
444444 repealed.
445445 SECTION 6. EFFECTIVE DATE. Sections 2 and 5 of this Act are effective for taxable
446446 events occurring after June 30, 2025. Sections 3 and 4 of this Act are effective for taxable years
447447 beginning after December 31, 2024.
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