Officials say it remains to be seen how many more North Dakota seniors may benefit from the expansion of the Homestead Tax Credit program.
During the recent legislative session, lawmakers passed Senate Bill 2171, an expansion of the Homestead Tax Credit. To qualify for the tax credit, one must either be over 65 or be permanently or totally disabled.
Tax Commissioner Cory Fong said the Homestead Tax Credit program has been highly successful and that the Tax Department plans to tour the state in the coming weeks to outline the expanded version to residents. More details will be released soon, he said.
“We don’t have any kind of estimate in terms of number of additional applicants,” Fong said.
In 2011 more than 3,900 applications were submitted with the credits being payable in 2012. He said the applications dealt with more than $8.7 million in taxable land value, and slightly more than $3 million in Homestead Tax Credits were issued.
In 2012, approximately 3,800 applications were received with the credits payable in 2013. Those applications dealt with about $8.9 million in taxable land value and, again, about $3 million was paid out in tax credits.
In the Tax Department budget, a total of $20 million was appropriated for the program for 2013-15. This is more than double the nearly $8.8 million previously appropriated.
Josh Askvig, a lobbyist with AARP of North Dakota, said that now with a widened income range for qualified applicants, he expects the number to increase substantially.
“As your income goes up and your ability to pay taxes goes up, your level of relief goes down,” Askvig said.
SB2171 breaks out potential tax credits into a series of income brackets. As a person’s income increases, the size of the tax credit drops.
A person with income of $22,000 or less could receive a tax credit of up to $4,500. At the high end someone with income of up to $42,000 could qualify for up to $450.
Askvig noted that about 93 percent of North Dakotans over 65 received Social Security in 2011 with benefits averaging about $12,900 per person. This was a total of more than 91,000 people.
For the average person using Social Security benefits, it comprised of about 60 percent of their income, Askvig said. For low-to-moderate income people it could be closer to 80 percent.
“It’s important that people know the expansion’s happening,” Askvig said of the program. “We believe a good number of individuals will qualify for the homestead expansion.”
Fong noted that SB2171 removed the largest barrier, known as an “asset test.”
Applicants were disqualified if their total assets were higher than $75,000, excluding the unencumbered valuation of their homestead. Seniors who apply now can have up to $500,000 in assets to qualify.
“That’s going to bring a lot of folks into the program,” Fong said. “I think there’s a recognition by lawmakers over the years that this is an important part of the overall tax package.”