North Dakota Tax Incentives
Biodiesel Sales Equipment Tax Credit
The state of North Dakota offers a five-year corporate income tax credit for equipment that enables a facility to sell diesel fuel containing at least 2% biodiesel by volume. The tax credit is worth up to 10% per year, for up to five years, of the biodiesel seller's direct costs incurred after December 31, 2004, to adapt or add equipment to a facility. The credit is limited to $50,000 in the cumulative amount of credits for all taxable years. Biodiesel fuel must meet the specifications adopted by the American Society for Testing and Materials (ASTM). (Reference North Dakota Century Code 57-38-01.23)
Biodiesel Production Equipment Tax Credit
A corporate income tax credit is available in the amount of 10% per year for five years of the taxpayer's direct costs incurred to adapt or add equipment to retrofit an existing facility or adapt a new facility in the state for the purpose of producing or blending diesel fuel containing at least 2% biodiesel fuel by volume. Eligible direct costs must be incurred after December 31, 2002, and a taxpayer is limited to $250,000 in the cumulative amount of credits for all taxable years. Biodiesel fuel must meet the specifications adopted by the American Society for Testing and Materials (ASTM). (Reference North Dakota Century Code 57-38-30.6)
Biodiesel Income Tax Credit
A licensed fuel supplier who blends biodiesel into fuel is entitled to an income tax credit in the amount of $0.05 per gallon (3.79 liters) of biodiesel fuel comprised of at least 5% biodiesel. (Reference North Dakota Century Code 57-38-01.22)
Ethanol Blend Tax Rate Reduction
A state excise tax of $0.23 per gallon is imposed on all special fuels sold or used in the state, including compressed natural gas and liquefied petroleum gas. The sale of ethanol blended gasoline fuel containing 85% ethanol (E85) is exempt from the $0.23 per gallon tax, and is instead subject to a reduced tax of $0.01 per gallon on all E85 fuel sold or used in the state. (Reference North Dakota Century Code 57-43.1-02 and 57-43.2-02)
Alternative Fuel Tax Rates
A special excise tax rate of 2% is imposed on the sale of propane and a tax of $0.04 per gallon is imposed on all sales of diesel fuel and other special fuels previously exempted. (Reference House Bill 1348, 2007, and North Dakota Century Code 57-43.2-02 and 57-43.2-03)
Biodiesel Equipment Tax Exemption
Sales of equipment to a facility that is used to sell diesel fuel containing at least 2% biodiesel is exempt from sales tax. (Reference North Dakota Century Code 57-39.2-04)
Hydrogen Tax Exemption
Sales of hydrogen to power an internal combustion engine or fuel cell are exempt from the state sales tax. This exemption is effective through June 30, 2010. (Reference North Dakota Century Code 57-43.2-02.4)
