Home / North Dakota Tax Credits

North Dakota Tax Credits

North Dakota’s Angel Fund Credit

The Angel Fund Credit is the most beneficial credit in North Dakota for qualifying taxpayers and is geared towards incentivizing early state and mid stage funding of new companies with growth potential in North Dakota. The state offers a generous 45% credit (45% of the taxpayer’s investment in the business) with a cap of $45,000 per year. Starting in 2011, there is a lifetime cap of $150,000 in Angel Fund Credits, but taxpayers as of 2011 may sell, assign or transfer up to $100,000 in Angel Fund Credits for tax years 2011 and 2012. The Angel Fund Credit is a terrific incentive for funding new start ups by offsetting 45% of the risk of a new business investment in the form of this tax credit.

North Dakota R&D Tax Credit

North Dakota offers an excellent R&D credit that can be double the Federal benefit in many cases. The North Dakota R&D tax credit (known as the North Dakota research expense credit) is a tiered credit with a sizable 25% credit on the initial $100,000 in R&D expenses with additional tiers that could result in another 18% credit on the increment above $100,000 if the taxpayer has been in North Dakota since 2007 and had qualified R&D North Dakota spend. This can far exceed the Federal R&D credit which is a 13% credit if using the reduced credit under 280C.
North Dakota offers other generous credits such as the Angel Fund credit discussed on this site for new start ups; moreover the R&D credit can be sold to other taxpayers offering an opportunity to still take the Angel Credit first, then either carry the North Dakota R&D credit forward for up to 15 years, or sell the R&D credits to other taxpayers.

Biomass / Solar / Geothermal Wind Energy Credits in North Dakota

Corporations can also earn income tax credits for installing alternative energy devices in either owned or leased property in North Dakota. The state offers a 3% credit based on the cost of the equipment and installation costs and can be claimed for the first 5 years when the device is placed in service. For equipment placed in service after 9/30/08, any unused credits can be carried forward for up to 10 years and up to 20 years for wind energy equipment.