A BILL for an Act to create and enact a new subsection to section 57-39.2-04 of the North Dakota Century Code, relating to a sales tax exemption for sales of clothing by a thrift store of a nonprofit corporation; and to provide an effective date.
HB 1428 would have created a new sales tax exemption in North Dakota for clothing sold by thrift stores owned and operated by nonprofit corporations that are exempt under section 501(c)(3) of the Internal Revenue Code. The bill defines “clothing” broadly as human wearing apparel suitable for general use, while excluding items such as accessories, protective equipment, and sport or recreational equipment. It also specifies examples of excluded items, including handbags, jewelry, sunglasses, watches, wigs, masks, hard hats, gloves, safety glasses, ballet shoes, skates, and wetsuits.
The exemption would have applied only to taxable events occurring after June 30, 2025. In practical terms, the measure would have reduced the sales tax burden on qualifying nonprofit thrift stores and their customers for clothing sales, while leaving other categories of merchandise sold by those stores subject to existing tax rules unless separately exempted by law.
The bill would have amended section 57-39.2-04 of the North Dakota Century Code, which governs sales tax exemptions, by adding a new exemption for clothing sales by qualifying nonprofit thrift stores. This would have narrowed the tax base for those specific transactions and required tax administrators and retailers to distinguish exempt clothing from taxable accessories, protective gear, and athletic/recreational items. Because the bill failed, no change to state law took effect.
The voting history suggests the bill had mixed but ultimately insufficient support. It passed several readings in the House and Senate at different points, including a strong Senate vote, indicating that many lawmakers were receptive to the idea of helping nonprofit thrift stores through a targeted tax exemption. However, the final House vote rejected the measure, showing that support was not durable enough to enact it. With no committee transcript available, the recorded votes are the best indicator of sentiment, and they point to a generally favorable but divided legislative response.
The main point of contention appears to have been whether nonprofit thrift store clothing sales should receive a special sales tax exemption and how broadly that exemption should be drawn. Supporters likely viewed the bill as a way to assist charitable thrift operations and keep clothing more affordable, while opponents may have been concerned about carving out another sales tax exemption, the administrative burden of classifying items, or the fairness of exempting one retail segment over others. The detailed definitions of excluded items suggest lawmakers were also attentive to boundary issues about what counts as clothing versus accessories or equipment.