A technical change in HB1626 shifts the order of tax calculations in a way that increases the dollar value of early-payment discounts for eligible taxpayers.
Most North Dakota property owners don't realize that the order in which tax deductions and discounts are applied can meaningfully change their final tax bill. HB1626 makes exactly this kind of change—and it's worth understanding if you own residential property or manage rental portfolios in the state.
What the provision does
HB1626 amends Section 57-20-09 to change the sequence in which two tax benefits are calculated. Under the new rule, effective for taxable years beginning after December 31, 2025, the 5% early-payment discount is now applied before the primary residence credit reduces your tax base.
This matters because of basic math: a 5% discount on a larger number produces a bigger absolute dollar reduction than a 5% discount on a smaller number. By calculating the discount first—before the primary residence credit shrinks the taxable amount—taxpayers who pay by February 15 receive a larger discount in dollar terms.
A concrete example
Suppose your property tax before any credits or discounts is $2,000. The primary residence credit reduces that to $1,800. Under the old sequencing, a 5% early-payment discount would apply to $1,800, yielding a $90 discount. Under the new sequencing in HB1626, the 5% discount applies to the original $2,000 first, yielding a $100 discount—then the primary residence credit applies to what remains. The difference: $10 more in your pocket for paying early.
For properties with higher assessed values or in counties with higher tax rates, this difference compounds.
Who this affects
This change applies to property owners who qualify for North Dakota's primary residence credit and who pay their property taxes early (by February 15). If you own a home you occupy as your primary residence, or if you manage rental properties where tenants or owners might benefit from this credit, you should be aware of this change.
The provision does not create new eligibility for the primary residence credit or the early-payment discount. It simply reorders how existing benefits are calculated.
Timeline
The change takes effect for taxable years beginning after December 31, 2025. That means it first applies to property tax bills assessed in 2026 for taxes due in 2026.
What to do now
If you manage properties or advise clients on tax strategy, note this change in your records. When 2026 tax bills arrive, the early-payment discount will be larger than it would have been under the previous calculation method—assuming the property qualifies for the primary residence credit. This is a modest but real benefit for early payers, and it's worth factoring into cash-flow planning.
The full text of HB1626 and the amendment to Section 57-20-09 are available through the North Dakota Legislative Branch website for those who want to review the statutory language directly.