Office of State Tax Commissioner
600 E. Boulevard Ave.
Bismarck, ND 58505-0599
Bismarck, ND 58505-0599
Automation Credit
21st Century Manufacturing Workforce Incentive
This credit is allowed only for the 2019 through 2022 tax years.
An income tax credit is allowed to a primary sector business for purchasing new or used automation and robotic machinery and equipment for the purpose of upgrading or advancing a manufacturing process. The upgrade or advancement must improve job quality or increase productivity. A purchase includes acquisition of qualifying machinery and equipment by means of a capital lease agreement. A primary sector business is one that the North Dakota Commerce Department, Division of Economic Development and Finance (EDF), has certified as employing knowledge or labor to add value to a product, process, or service which generates new wealth in the state.
A business must apply to the North Dakota Commerce Department’s Division of Economic Development and Finance (EDF) for review and approval of the purchases. Based on the approved purchases, the North Dakota Office of State Tax Commissioner calculates the allowable credit and issues a credit certification letter to the business.
The credit is equal to 20% of the cost of the approved machinery and equipment. For an acquisition by capital lease, the cost is the fair market value of the machinery or equipment at the inception of the lease. The maximum credits allowed to all taxpayers is $1 million per calendar year. If total credits in a year exceed $1 million, the available credits are prorated among the qualifying taxpayers. If any portion of the maximum amount of credits allowed in a calendar year is unclaimed, the unclaimed credits are added to the following calendar year’s maximum credit allowance. (The last year to which unclaimed credits may be added is the 2022 calendar year.)
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. In the case of a corporation included in a consolidated North Dakota income tax return, the credit may be used to reduce the aggregate tax liability of all corporations in the return. If a credit exceeds a taxpayer’s tax liability, the unused portion may be carried forward up to five tax years.
Reporting requirement. Within one year after claiming a credit, the business must file a report with the State Tax Commissioner documenting the improved job quality or increased productivity, and any other information the State Tax Commissioner determines is necessary for administration of the credit.
Reference: N.D.C.C. § 57-38-01.36
