A BILL for an Act to create and enact a new section to chapter 57-39.2 of the North Dakota Century Code, relating to a sales and use tax exemption for purchases made by a contractor, subcontractor, or builder on behalf of the state of North Dakota; to amend and reenact section 57-40.2-03.3 of the North Dakota Century Code, relating to use tax on contractors; and to provide an effective date.
HB1546 would create a new sales and use tax exemption for certain tangible personal property purchased by a licensed contractor, subcontractor, or builder when the purchase is made on behalf of the State of North Dakota. To qualify, the contractor must hold a valid sales tax permit, obtain a purchasing agent authorization letter from the state, and have the state’s exemption certificate before buying or withdrawing the property from inventory. The exemption applies only when the materials become part of an improvement to real property owned by the state, and it does not extend to local home-rule city or county sales and use taxes.
The bill also amends North Dakota’s contractor use tax law to add the state-purchased materials exemption to the list of items excluded from use tax, with the change structured to take effect in stages. The current version would apply through June 30, 2025, then continue with a revised version after that date through June 30, 2029, and again after June 30, 2029. In practical terms, the measure would reduce tax liability on state construction projects by clarifying that materials bought for state-owned improvements are not subject to state sales or use tax when the statutory conditions are met.
HB1546 would modify chapters 57-39.2 and 57-40.2 of the North Dakota Century Code by adding a targeted exemption for state construction purchases and by revising the contractor use tax provisions to recognize that exemption. The bill would affect licensed contractors, subcontractors, builders, the State of North Dakota, and the Tax Commissioner’s administration of exemption certificates and purchasing-agent authorization. It would not change local home-rule taxing authority, so city and county local-option taxes could still apply where authorized.
The bill appears to have been framed as a technical tax clarification and cost-reduction measure for state projects, with no recorded committee testimony or vote breakdown available in the provided materials. Its failure on February 6, 2025, suggests it did not advance, but the available record does not show organized opposition or support. Overall, the measure reads as a pro-construction, pro-state-procurement tax relief proposal rather than a controversial policy change.
The main policy issue is whether purchases made by contractors for state projects should receive the same tax treatment as direct state purchases, and whether the exemption should be limited to materials that become part of state-owned real property. Another point of distinction is that the bill expressly excludes home-rule local taxes, which could matter to local governments and taxpayers in jurisdictions that rely on those revenues. Because the bill was not accompanied by committee transcripts or recorded votes in the provided context, no specific legislator, agency, contractor group, or local government opposition can be identified from the record here.