May 10, 2001

North Dakota Machinery Sales Tax Cut

North Dakota lawmakers voted to retain the 1.5 percent tax on used farm machinery and farm parts through June 30, 2002, and repeal it completely after that. Previously, the 1999 Legislature cut the rate in half from 3 percent to 1.5 percent. It was scheduled to revert back to 3 percent on June 30 of this year.

"This rate applies only to the purchase of used farm machinery and farm parts. The tax on new farm machinery remains at 3 percent," notes Ron Haugen, farm economist with the North Dakota State University Extension Service.

According to North Dakota State Tax Department estimates, the legislation will reduce state revenues by about $4.86 million for the next biennium.

The tax savings is relatively small on an individual basis. As compared to the 3 percent tax, a producer purchasing $10,000 worth of used machinery would realize a savings of $150 currently, and $300 after June 30, 2002. For a $1,000 purchase of parts the savings would be $15 now and $30 after June 30, 2002.

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Source: Ron Haugen, (701) 231-8103, rhaugen@ndsuext.nodak.edu 
Editor: Tom Jirik, (701) 231-9629, tjirik@ndsuext.nodak.edu