North Dakota lawmakers float property tax freeze, credit for older homeowners

Sen. Curt Kreun, R-Grand Forks, is sponsoring Senate Bill 2177, which would freeze the property tax bills of homeowners ages 65 and older.

The legislation, which has attracted five Republican co-sponsors, would encourage older residents to stick around their hometowns by insulating them from increasing property taxes, Kreun said.

“What we’re trying to accomplish is to keep a lot of our retired people in our communities,” Kreun told the Senate Finance and Taxation Committee during a hearing on Wednesday.

If the legislation passes, homeowners 65 and up could file a claim that “freezes” the amount of the property tax most recently levied against the valuation of their primary residence.

The suspension of claimants’ tax bill would remain in place unless improvements are made to a home that would raise its valuation. A homeowner who makes an improvement could then petition to add the tax on the improvement to the previously frozen amount.

Projections based on the U.S. Census indicate that the number of homes owned by North Dakotans ages 65 and up will grow from about 69,000 in 2024 to 78,000 in 2029.

Kreun said he personally knows older adults hitting retirement age who are weighing whether to stay in their homes or move into communal living facilities. The prospect of rising property taxes could give them a reason to move away from their communities, where they provide value as volunteers at local institutions and events, he said.

Estimates provided to Kreun by the North Dakota Housing Finance Agency suggest freezing older residents’ property taxes would cost cities, counties, schools and other local taxing entities about $7.5 million in 2024. That figure would grow to an estimated $16.2 million in 2025 and $26.3 million in 2026.

Matt Gardner, the director of the North Dakota League of Cities, testified against the bill, noting the lost tax revenue would disproportionately hurt small cities, which need every dollar they can get to provide local services.

Gardner added that the Homestead Tax Credit administered by the state already offers meaningful property tax relief to older residents with limited income.

Kreun argued that keeping older residents in their homes would result in savings for the Department of Health and Human Services. The lawmaker added that localities should have a stake in maintaining their taxpayers.

“I think each community can help us as a state keep our people in North Dakota, as well as in their communities,” Kreun said. “I think everyone should have a little skin in the game.”

The Senate Finance and Taxation Committee did not take action on the bill Wednesday.

Rep. Larry Bellew, R-Minot, is sponsoring House Bill 1380, which would grant homeowners 65 and up a property tax credit equal to the valuation of their primary residence.

Under Bellew’s plan, the state would foot the bill for the cost of older residents’ property taxes. The proposal sets aside $330 million for the state to pay local taxing districts over the two-year budget cycle beginning in July 2023. The nine-figure sum would compensate cities, counties and schools for the lost revenue.

The bill is scheduled for a hearing before the House Finance and Taxation Committee on Monday.

Lawmakers are considering a handful of other competing bills to cut taxes.

Sen. Don Schaible, R-Mott, is leading the charge on Senate Bill 2066, which would reduce North Dakotans’ property tax bills by about 25% statewide.

Under the proposal, the state would assume the part of property tax apportioned to K-12 education funding. The plan would also freeze the education-dedicated piece of property valuations for two years.

Republican Gov. Doug Burgum has thrown his support behind House Bill 1158, which would eliminate personal income tax for single filers making $44,725 or less and for married filers making $74,750 or less. Higher earners would pay a flat tax of 1.5% under the proposal sponsored by Rep. Craig Headland, R-Montpelier.