AN ACT to amend and reenact section 57-38-59 of the North Dakota Century Code, relating to withholding from wages of employees; and to provide an effective date.
Summary
SB 2047 amends North Dakota’s wage withholding law for state income tax purposes. The bill keeps the basic framework that requires employers to withhold state income tax from employee wages, but it clarifies and updates how the Tax Commissioner may set the withholding amount. Under the bill, withholding continues to be tied to a percentage of federal income tax withheld, unless the commissioner instead adopts withholding tables by rule.
The bill also adds a new limitation: unless a taxpayer instructs otherwise, an employer may not withhold or deduct state income tax from wages described in subdivision g of subsection 2 of section 57-38-30.3. The act applies beginning with taxable years after December 31, 2025, so it does not affect withholding immediately in 2025 but changes employer payroll withholding rules for later tax years.
Impact
The bill amends section 57-38-59 of the North Dakota Century Code, affecting employers, payroll processors, and the Tax Commissioner’s authority over state income tax withholding. It preserves the commissioner’s discretion to adjust withholding percentages or adopt withholding tables, while creating an express prohibition on withholding from a specified category of wages unless the taxpayer directs otherwise. The practical effect is to change payroll administration and state tax withholding compliance beginning with taxable years after 2025.
Sentiment
The bill appears to have been broadly supported and noncontroversial. It passed the Senate unanimously, 46-0, and the House by a strong margin, 86-6. The absence of committee transcript discussion suggests limited public dispute or that the measure was viewed as a technical or administrative tax update rather than a major policy change.
Contention
The main point of potential contention is the new restriction on withholding from the wages identified in section 57-38-30.3(2)(g), which may affect how certain types of compensation are handled unless the taxpayer opts in. Any disagreement would likely center on payroll compliance burdens, taxpayer choice, and whether the Tax Commissioner should retain broader discretion over withholding methods. However, the recorded votes indicate little organized opposition.