North Dakota Cuts Income Tax; Missouri Considering

May 27, 2009

Last year, we noted that North Dakota was one of the few states with a structural budget surplus, thanks to flush revenues from the personal and corporate income taxes. In November 2008, a ballot initiative to cut these rates did not pass, partly because of concerns about whether it would interfere with a separate push to cut property taxes. Now, however, Gov. John Hoeven has approved a much more modest cut in the two taxes, retroactive to January 1, 2009:

North Dakota Individual Income Tax, 2009
Single Person

Income Bracket

Pre-Cut Rate

Post-Cut Rate

>$0

2.10%

1.84%

>$33,950

3.92%

3.44%

>$82,250

4.34%

3.81%

>$171,550

5.04%

4.42%

>$372,950

5.54%

4.86%

Married Filing Jointly & Surviving Spouse

Income Bracket

Pre-Cut Rate

Post-Cut Rate

>$0

2.10%

1.84%

>$56,750

3.92%

3.44%

>$137,050

4.34%

3.81%

>$208,850

5.04%

4.42%

>$372,950

5.54%

4.86%

North Dakota Corporate Income Tax, 2009

Bracket

Post-Cut Rate

>$0

2.10%

>$25,000

5.25%

>$50,000

6.40%

The corporate cut also eliminated two unnecessary brackets, and is estimated to reduce corporate tax collections by $10 million per year. The individual income tax cut is estimated to reduce collections by $90 million per year. Also enacted was property tax relief imposing a statewide rate cap and mandating reductions to be backfilled by state funds. $295 million has been reserved for the purpose for 2011-13.

Missouri's House of Representatives on April 30 also passed a bill to cut each individual income tax bracket by 0.5 percentage points, retroactive to January 1, 2009. The bill has not yet been voted on by the State Senate.

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