Committee advances bill to stop routine withholding from exempt military pay

The House Finance and Taxation Committee on Thursday recommended a due pass for Senate Bill 20‑47, a measure that would prevent employers from routinely withholding North Dakota income tax from military pay that the 2023 Legislature exempted from state income tax.

Matthew Danielson, legal counsel to the North Dakota Office of the State Tax Commissioner, testified the bill simply aligns withholding rules with the exemption adopted in 2023 (Senate Bill 22‑93). He said current law still requires withholding from military wages even though the wages are no longer taxable, producing unnecessary refunds and delaying service members’ receipt of pay.

"Senate Bill 20‑47 creates an exception to the income withholding requirements, providing that tax cannot be withheld from military pay unless the service member specifically requests that tax be withheld," Danielson told the committee. He said the change would let service members get exempt pay as they earn it and avoid unnecessary refunds. The bill’s stated effective date is for taxable years beginning after Dec. 31, 2025.

Representative Olson moved that the committee recommend a due pass; Representative Anderson seconded. The committee recorded an affirmative vote and the panel later voted to move the bill to the consent calendar for floor consideration.

The hearing included no testimony in opposition and no amendments were adopted in committee. Committee members asked no sustained substantive questions after Danielson’s remarks and no additional witnesses appeared in opposition.

The committee’s action sends the bill to the full House with a recommendation; the bill remains subject to further floor action and any amendments there.

Votes at a glance: Committee recommendation — Due pass; procedural move — placed on consent calendar; recorded tally reported in committee as 12 yes, 0 no, 2 not voting.