A BILL for an Act to create and enact a new subdivision to subsection 2 of section 57-38-30.3 of the North Dakota Century Code, relating to an individual income tax deduction for a segal Americorps education award; and to provide an effective date.
Summary
HB 1107 would amend North Dakota’s individual income tax law to create a new deduction for Segal AmeriCorps education awards. Specifically, it allows a taxpayer to subtract from North Dakota taxable income the amount of a Segal AmeriCorps award received during the tax year, but only to the extent that the award was included in federal taxable income. The bill applies to taxable years beginning after December 31, 2024.
In practical terms, the bill would reduce state income tax liability for AmeriCorps members who receive these education awards and are taxed on them at the federal level. It would add a targeted subtraction to the state’s income tax code, affecting section 57-38-30.3 of the North Dakota Century Code, and would primarily benefit individuals using AmeriCorps education benefits to pay for higher education or related expenses.
Impact
The bill would create a new state income tax deduction for Segal AmeriCorps education awards, changing North Dakota’s tax treatment of those awards for future tax years. It would not alter the federal tax rules governing the award, but it would allow taxpayers to exclude the federally taxable portion from North Dakota taxable income. The affected parties are AmeriCorps participants and other taxpayers who receive and report these education awards, while the state would forgo some income tax revenue associated with those amounts.
Sentiment
The bill appears to have had broad support in the House, passing second reading 84-5, but it failed in the Senate on a 22-25 vote. That voting pattern suggests the proposal was generally viewed favorably by the House but did not secure enough support in the Senate. No committee transcripts were provided, so the available record shows support in one chamber and a narrow defeat in the other, rather than a strongly polarized debate.
Contention
The main point of contention appears to have been whether North Dakota should create a targeted tax preference for AmeriCorps education awards. Supporters likely viewed the deduction as a modest way to encourage public service and reduce tax burdens on participants, while opponents may have been concerned about narrowing the tax base, creating a special deduction for a limited group, or setting a precedent for additional income tax exemptions. The close Senate vote indicates the issue was contested, even though the House vote was overwhelmingly favorable.