Read more about the tax incentives North Dakota has to offer in the North Dakota Tax Incentives for Business brochure from the Office of the State Tax Commissioner.
A taxpayer is allowed an income tax credit for the purchase or capital lease of machinery and equipment to automate a manufacturing or animal agricultural process in North Dakota
Application Period is Now Open
New corporations that qualify as primary sector businesses may pay $0 in corporate income taxes for the first five years of their existence in North Dakota, if they apply for and are granted an exemption through the State Board of Equalization. Significant expansions beyond the initial location of a primary sector business may apply for an additional five-year corporate income tax exemption.
Learn more about corporate tax incentives from the Office of State Tax Commissioner.
Personal property is exempt from taxation with the exception of certain oil and gas refineries and utilities in North Dakota. This means there is no property tax on items such as office equipment, inventory, accounts receivable or materials.
Local taxing authorities in North Dakota control property tax rates and exemptions. Any new or expanding business project may be granted a property tax exemption for up to five years. Two extensions are available:
- Agricultural processors may be granted a partial or full exemption for up to five additional years.
- A project located on property leased from a government entity qualifies for an exemption for up to five additional years upon annual application by the project operator.
In addition to or in lieu of a property tax exemption, a company may negotiate payments in lieu of taxes for up to 20 years from the date of commencement of project operations.
North Dakota property tax is determined by multiplying the taxable value of real property -- land and buildings -- by the local mill rate. North Dakota commercial property tax is calculated by multiplying true and full value of commercial property, which the local assessor establishes, by 50 percent to reach assessed value; then multiplying assessed value by 10 percent to reach taxable value; and then multiplying taxable value by the local mill rate.
Learn more about property tax rates and exemptions from the Office of the State Tax Commissioner.
North Dakota provides sales tax exemptions for equipment and materials used in manufacturing and other targeted industries. A new or expanding plant may be exempt from sales and use tax on purchases of machinery or equipment used for manufacturing, agricultural commodity processing or recycling.
Other exemptions available include:
- Sales and use tax exemption for purchases of computer and telecommunications equipment that is part of a primary sector business or a physical or economic expansion of a primary sector business. The exemption does not extend to the purchase of replacement equipment.
- Sales tax exemption for owners, operators, and tenants on the information technology equipment and computer software, including replacement equipment and software, of a qualified data center. (Limited to the first four qualified data centers approved by the Tax Commissioner.)
- Construction materials used to construct an agricultural processing facility may be exempt from sales and use taxes.
- Additional exemptions for all businesses include electricity, interstate communications over phone lines and natural gas.
Applications for sales tax exemptions are made through the State Tax Commissioner. If the exemption is not approved prior to purchase, the manufacturer, recycler, agricultural commodity processor or other primary sector business must pay the tax and apply for a refund.
Learn more about sales and use tax exemptions from the Office of State Tax Commissioner.
The Renaissance Zone program is to revitalize communities in our state and encourage development through tax incentives. It is a tool to help cities revitalize their communities. By offering both state and local tax incentives for 5 years, both residents and business owners are provided with an incentive to invest in the community.
Learn more about the Renaissance Zone Program.
An individual, estate, trust, partnership, corporation, or limited liability company is allowed an income tax credit for conducting research in North Dakota. The credit is equal to a percentage of the excess of qualified research expenses in North Dakota over the base period research expenses.
For more details see N.D.C.C. 57-38-30.5.
A business must be certified as a "qualified research and development company" before a taxpayer can elect to sell, transfer, or assign all or part of its unused Research and Experimental Expenditure Tax Credit. To apply for certification please complete the application for Research and Development Company Certification.
Research & Development Company Certification - SFN58638