AN ACT to create and enact a new section to chapter 57-38 and a new subdivision to subsection 7 of section 57-38-30.3 of the North Dakota Century Code, relating to a prison industries workforce development income tax credit; to provide for a legislative management study; and to provide an effective date.
Summary
SB 2261 would create a new North Dakota income tax credit for primary sector businesses that buy components or labor from prison industries. The credit is nonrefundable and equals 10% of the cost of qualifying purchases made during the calendar year, with unused credit allowed to carry forward for up to five years. The bill also sets an annual statewide cap of $45,000 on total credits, requires the tax commissioner to prorate claims if applications exceed the cap, and establishes reporting and documentation requirements for taxpayers seeking the credit.
The bill also directs a legislative management study during the 2025-26 interim on prison industries and workforce development for incarcerated individuals. That study is intended to examine how prison industries can align with manufacturing and other private-sector industries to support workforce development and improve outcomes for people leaving the criminal justice system. The credit and related income tax changes apply to taxable years beginning after December 31, 2024.
Impact
SB 2261 amends chapter 57-38 of the North Dakota Century Code by creating a new prison industries workforce development credit and adding it to the list of income tax credits available under section 57-38-30.3. It affects primary sector businesses, passthrough entities, and individual taxpayers who receive the credit through a passthrough structure, while also imposing administrative duties on the tax commissioner to verify claims and issue forms. The bill is limited in fiscal scope by the $45,000 annual aggregate cap and by its nonrefundable nature, but it creates a new incentive tied to purchases from prison industries and may influence procurement relationships between private businesses and correctional industry programs.
Sentiment
The bill appears to have had generally favorable support in the Senate, passing second reading 43-3 and later overriding the veto 45-2. The House was more divided, passing second reading 56-33 but then sustaining the veto by a wide margin, 78-15. Overall, the voting history suggests the proposal had meaningful support, especially in the Senate, but also significant opposition in the House at the veto stage.
Contention
The main point of contention appears to have been whether the state should create a targeted tax subsidy for purchases from prison industries and whether that incentive is the best way to support workforce development for incarcerated individuals. Supporters likely viewed the credit and study as a way to strengthen prison industries, connect them to private-sector manufacturing, and improve reentry outcomes. Opponents may have questioned the use of tax credits for this purpose, the limited statewide cap, or the broader policy implications of expanding prison-industry-linked economic incentives. The split House vote on the veto indicates that the credit and the policy direction behind it remained controversial even after initial passage.
AN ACT to create and enact a new section to chapter 57-38 and a new subdivision to subsection 7 of section 57-38-30.3 of the North Dakota Century Code, relating to a prison industries workforce development income tax credit; to provide for a legislative management study; and to provide an effective date.
AN ACT to create and enact a new section to chapter 57-38 and new subdivision to subsection 7 of section 57-38-30.3 of the North Dakota Century Code, relating to an income tax credit for child care contributions provided by qualified employers; and to provide an effective date.
A BILL for an Act to create and enact a new section to chapter 57-38 and a new subdivision to subsection 7 of section 57-38-30.3 of the North Dakota Century Code, relating to a home education income tax credit for qualified educational expenses; and to provide an effective date.
A BILL for an Act to create and enact a new subdivision to subsection 1 of section 57-38-01.3 and a new subdivision to subsection 2 of section 57-38-30.3 of the North Dakota Century Code, relating to a personal and corporate income tax adjustment for capital gains from the sale of bullion; and to provide an effective date.
A BILL for an Act to amend and reenact subsections 1 and 7 of section 57-38-30.3 of the North Dakota Century Code, relating to income tax rates for individuals, estates, and trusts and the marriage penalty credit; to repeal section 57-38-01.28 of the North Dakota Century Code, relating to the marriage penalty credit; and to provide an effective date.