A sight towards a sustainable future for North Dakotans
North Dakota is leading the way in providing sustainable living conditions for its residents. The state just passed a historic income tax reform plan to slash individual income taxes and save North Dakota taxpayers $250M per year. This will inevitably result in a more stable economy and better quality of life for all North Dakotans.
North Dakota has become a hotbed for oil and energy industry, as well as agriculture. The tax reform proposal will provide an expansive future for residents and businesses as it works to meet the challenges faced in oil production, agriculture and technology, while providing a strong environment for business owners to thrive as it aims to further diversify the economy.
The proposed tax reform, aims to effectively eliminate the state’s individual income tax for over 388,000 North Dakota taxpayers whose adjusted gross income is $54,725 or less for single filers or $95,600 or less for married couples filing jointly. In addition to that, Those with higher income levels would only have to pay a flat tax of 1.5%, a significant decrease compared to current income tax rates that range from 2.04% to 2.9%. This means, almost 60% of taxpayers will not have to pay state income tax!
In an article by North Dakota, Office of the Governor, State Tax Commissioner Brian Kroshus stated, “This is the largest income tax relief package in state history and will establish North Dakota as the lowest flat-tax state in the nation, while still retaining a state income tax collection system to fund priorities. All income earners will see measurable relief, increasing disposable income that can quickly enter the North Dakota economy. This is also the most effective tax relief option available at the state level, reaching the most people while providing the highest percentage tax reduction for new families, lower-income filers and those just entering the workforce, including college graduates.”
What does this imply for North Dakota’s Economy and why is this important to you?
A decrease in state income tax means an increase in an individual’s purchasing capability. This means that North Dakotans will have more money to spend on goods and services which is good news for developing businesses. In addition, this tax cut will make it easier for people to save money and invest in assets like real estate which will help them build wealth through equity. According to the recent Quarterly Report of NDSU on Economic Outlook, North Dakota’s economy continues to show signs of economic growth in 2022. Forecasts show increasing wages and salaries, a low unemployment rate, and a growing labor force. Despite recent declines, the outlook for gross state product and tax collections remains strong.
North Dakota's Unemployment rate as of July 2022 is at 2.3%, significantly lower than the national average at 3.5%, placing it among the country’s lowest. With primary workforce coming from the recovering oil and energy industry, the state is projected to outperform the looming effects of the crisis. In addition, The state’s plan on slashing the taxes will surely attract businesses to flourish in the state. This means more jobs and opportunities for its residents, strengthening projections for its economic growth and development in the coming years.
North Dakota is among the top states ranked for economic outlook in 2022 even prior to the income tax reform. Therefore, implementing this reform will mean a huge step forward for the state to become one of the country’s most desirable places to live and work. This will boost businesses and families alike. The state is already seeing an influx of new businesses, and this tax reform will only help to grow the economy even further. The real estate industry is going to be one of the assets that will benefit the most as demand for space will always be a factor for these businesses to thrive.
How can this affect North Dakota’s Housing Market?
The housing market in general has been on quite a ride these past few months. The shift in the housing market is driven by a lot of factors; primarily the sharp fluctuations of interest and inflation rates as well as the gradual increase in mortgage rates. These increases in rates have hindered homebuyers from purchasing their homes as this primarily affects their purchasing power. However, we can see recent data showing that inflation rates in the U.S have slowed more than expected to 8.5% in July of 2022 from an over 40-year high of 9.1% hit in June, and below market forecasts of 8.7%. This sheds light on the pressing matter that the worst may have already been factored in, and that numbers will gradually continue to get better from here.
Infographic from Tradingeconomics.com
Rising inflation rates primarily affect an individual’s purchasing power, so the implementation of the proposed tax cut in North Dakota will extensively give a sigh of relief to the people. This will allow North Dakotans to keep more of their paychecks in their own wallets. This also means more money to be allocated for asset investments, creating a positive environment for North Dakota Real Estate. People naturally want to invest for shelter and security.
With North Dakota’s undeniable economic outlook and the proposed Tax reform which will make North Dakota the lowest Flat-Tax rate in the nation, The state is primed to become a sought-after place for businesses and families to thrive for a more sustainable future.
We at Proven Realty aim to provide the best real estate investment plan that suits your preferences. We ensure that the right strategies are implemented with ease from start to finish. Give us a call about your real estate needs; we will be honored to help you in the journey. Invest in North Dakota now!