Income Tax Incentives
Note: This credit is allowed only for the 2013 through 2017 tax years.
An individual, estate, trust, partnership, corporation, or limited liability company is allowed an income tax credit for purchasing machinery and equipment for the purpose of automating a manufacturing process in North Dakota. A purchase includes qualifying machinery and equipment acquired through a capital lease agreement. The credit is equal to 20% of the cost of the machinery and equipment approved by the Department of Commerce Division of Economic Development and Finance (EDF). In the case of a capital lease, the cost is the fair market value of the machinery or equipment at the inception of the lease. The business must be certified by EDF as a primary sector business to be eligible for the credit. An unused credit may be carried forward up to five tax years. In the case of a passthrough entity, such as a partnership or S corporation, the credit is passed through to its owners in proportion to their ownership interests.
The credit allowed to a corporation included in a consolidated North Dakota income tax return may be used to reduce the aggregate tax liability of all corporations in the return. The total credits allowed for all qualifying purchases by all taxpayers is limited to $2 million per calendar year for the 2013 through 2015 calendar years, and $500,000 per calendar year for the 2016 and 2017 calendar years.