Will North Dakota Property Tax Be Eliminated?

This November, North Dakota homeowners will face a benchmark ballot decision: eliminating property tax.

If approved, Measure 4, appearing on the state’s November election ballot would make North Dakota the first state in the U.S. to repeal property taxes on the assessed value of a home. (Though similar initiatives have been floated in Florida and Michigan.)

At first glance, the proposal may entice some folks. Who doesn’t want to pay less tax? Rising home values have crippled housing affordability, and many North Dakotans might understandably be fed up. 

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However, some tax policy experts and local organizations signal that the measure could hurt community members in other ways since property taxes are a main source of funding for numerous government services, including K-12 public schools and infrastructure. 

Here’s more of what you need to know about what’s at stake if you vote to ban North Dakota property tax.

North Dakota property tax measure

Measure 4  is essentially designed to prohibit state and local governments from levying tax on the assessed value of a home in North Dakota. (Taxes levied to pay for bonded indebtedness would be allowed.) 

An organization, End Unfair Property Tax, is leading the charge to gain approval for the property tax measure. Former state Rep. Rick Becker (R), who sponsored the proposal, argues that "property tax is a fairly immoral tax." Becker points to "unfair valuations," rising property taxes, and the "improper" ability of the state to seize a home due to unpaid taxes as reasons favoring reform. 

On its website, End Unfair Property Tax argues the state is overspending by as much as $2 billion a year on "corporate welfare and special interest payouts," funds the group says could offset revenue losses from a property tax ban.

It's worth noting that North Dakota experienced the highest growth in GDP among all 50 states in the first quarter of 2023.  At the time, that figure represented a year-over-year increase of 12.4%, more than six times the nationwide average increase of 2%.

By the end of last year, North Dakota's real GDP was $58.02 billion, up from the previous year's $54.8 billion. 

Still, this isn't the first time North Dakota has weighed the elimination of property taxes. 

Twelve years ago, more than 76% of North Dakota voters rejected a ballot measure to eliminate property taxes in the state. And now, the current proposal has its fair share of critics.

‘It could come back to haunt North Dakotans’ 

For example, several local organizations oppose the ballot initiative, including the North Dakota School Board Association, the Greater North Dakota Chamber, the Sheriffs and Deputies Association, the ND Fire Chiefs Association, and more. A primary concern is the measure could fail to deliver the economic benefits anticipated by supporters.

A key advocacy group opposing Measure 4, Keep it Local ND, has said the initiative "would be detrimental to our economy, our citizens, and our state as a whole."

There's also the issue of an estimated $1.3 billion in lost property tax revenue currently used to help fund essential state services.  

In a blog post, analysts from the Tax Foundation acknowledge the "obvious appeal" of the ballot measure, but describe it as "a choice that could come back and haunt North Dakotans."

The Tax Foundation points to these weaknesses tied to the proposal.

• Eliminating the tax would mean a loss of revenue that could limit benefits for North Dakota residents

Property taxes are used as a main source of revenue to fund and support local governments and district services such as public schools, police and fire districts, road repairs, and construction, and many other municipal services. Eliminating property taxes would likely limit some of those benefits due to a lack of revenue.

Some estimates indicate that eliminating property taxes in the Peace Garden state could result in lost revenue of $1 billion a year. 

• Eliminating property tax would transfer the responsibility for local revenue to the state government

In other words, according to the Tax Foundation, local officials would surrender spending decisions to the state government. Local governments would likely still be responsible for coming up with some of the lost property tax revenue.

• Eliminating property taxes would create a structural fiscal deficit in the state

A property tax repeal could put North Dakota’s revenue more than one billion in the red each year. To recoup those funds, taxes the state would have to raise taxes possibly at the local level as well. 

North Dakota property tax relief

The fate of property taxes has been long debated within North Dakota.

In North Dakota, a household with a median value of $280,600 would face an effective tax rate of 0.98% in property taxes. That translates to an average of $2,746.35 a year, according to Rocket Mortgage. 

However, last year, North Dakota Gov. Doug Burgum signed a major tax relief package, which provided a tax credit of up to $500 for homeowners on their primary residence. The bill also expanded eligibility requirements and the maximum reduction for the state’s Homestead Property Tax Credit program for homeowners 65 and up.

Most North Dakota homeowners could apply for the $500 credit against their property tax obligation. 

• To apply, you must own a home (house, mobile home, townhome, condo, duplex, or in North Dakota, and reside in it as your primary residence)  
• There are no age restrictions or income limitations for the credit 
• Only one credit is available per household 

Why your vote matters 

In less than 60 days, as a North Dakota voter, you face a key decision at the ballot box when it comes to property taxes. The outcome could impact your wallet and potentially vital services in your local community.

On one side are those who say property taxes are too high and unfair, particularly for older adults on fixed- incomes. Some North Dakotans are frustrated, and argue the legislature isn't doing enough to reduce property taxes. Those supporters are calling for more action like setting property tax caps or eliminating property tax on assessed home values.

But property taxes help fund essential services that could be hampered by a loss of revenue. Early estimates are that Measure 4 could cause a loss of more than a billion dollars and opponents don't see another source to replace those funds.

Ways to reduce property tax

No matter which way you decide to vote on the property tax measure, it's good to keep in mind that there are some ways to potentially reduce your property tax bill.

As Kiplinger has reported, you can consider appealing your property’s assessed value. Assessments can be outdated, which may result in a higher tax burden for you. Homeowners might also reduce taxes by avoiding major home improvements, as these can increase your property’s value. (For more tips see Ways To Lower Your Property Tax.)

Related

•  North Dakota State Tax Guide 
•  Will Florida Property Tax Be Eliminated? 
•  Property Tax Cap: Does Your State Have One?