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North Dakota to exempt military income from taxes

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Merrilee Gasser

(The Center Square) – North Dakota Governor Doug Burgum signed a bill into law this week that exempts military members who live in North Dakota from paying state income tax.

The passage of Senate Bill 2293 means active duty, guard and reserve members who serve in North Dakota will be exempt from income taxes on their military pay.

There are nearly 7,300 active-duty service members in the state. More than 11,000 will see tax relief through the measure when national guard and reserve members are taken into account.

“Cutting income taxes for all of those will help support their spouses and their children,” the governor said.

The bill is estimated to reduce service members’ taxes by $4 million from 2023-2025, according to the governor’s office.

The move means North Dakota joins twenty other states that do not tax military income, Burgum said. Other states include Arizona, Arkansas, Colorado, Illinois, Iowa, Kentucky, Michigan, Minnesota, Missouri, Montana, New Mexico, and Oklahoma.

“We’re in competition with every other state for workforce,” said Burgum. “And that workforce competition doesn’t matter whether it’s business, education, healthcare, or military personnel, we are in competition, and we’ve made a concerted effort in recent years to make North Dakota the most military friendly state in the nation. Not only because it’s good for workforce and our economy, but because it is the right thing to do for those men and women who defend our most cherished freedoms and protect our nation serving at home and abroad.”

Burgum signed the bill surrounded by members of the North Dakota National Guard and state guard members in the Black Hawk helicopter hanger at North Dakota Army National Guard’s Aviation Support Facility in Bismarck.

The bill takes effect for taxable years beginning after December 2022.

At least 15 other states offer partial tax exemptions for military income and nine fully exempt military income when living outside the state.

Only six states fully tax military income: Delaware, Georgia, Nebraska, Rhode Island, Utah, and the District of Columbia.

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire don’t tax income.

Burgum made tax relief a theme in his State of the State address earlier this year where he called for property tax relief and creating a better business tax environment and simplifying the tax code.