North DakotaS state income tax revenue is projected to decline by over $130 million begining in 2027 due to the impact of a recent tax law change colloquially known as the “Big Beautiful Bill,” according to statements made during a recent interim committee meeting.The reduction stems from provisions within House Bill 2183, enacted earlier this year, which altered how certain federal deductions are handled at the state level.
The revenue decrease will primarily affect the state’s general fund, possibly impacting funding for essential services like education, infrastructure, and public safety. Legislative committees will grapple with offsetting this loss during the 2027 legislative session, with potential action to address the shortfall anticipated as early as the next session. The change impacts taxpayers who itemize deductions on their federal income tax returns.Representative Brad Bekkedahl (R-Williston) indicated the question of “decoupling” state tax law from federal changes would be left to the tax committees. “It will be part of the discussion if there’s further erosion of the state revenues through the oil taxes as well,” Bekkedahl saeid.
House Bill 2183, signed into law in March 2023, modified how North Dakota handles federal deductions related to the 2017 Tax Cuts and Jobs Act. Prior to the bill’s passage, North Dakota generally followed federal deductions, but the new law introduces changes that will result in increased state taxable income for some residents. This,in turn,leads to a higher tax liability and a corresponding increase in state revenue-until 2027,when certain federal provisions revert to prior levels.
