North Dakota Incentives and Laws

Last Updated December 2006

State 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. (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. (Reference North Dakota Century Code 57-38-30.6)

Ethanol Production Incentive

The ethanol production incentive program provides funds for an incentive of $0.40 per gallon for ethanol produced and sold in North Dakota. An ethanol plant that was operational before July 1, 1995, with a production capacity of less than 15 million gallons is eligible for up to $900,000 in production incentives during the 2005-07 biennium. An ethanol plant that was operational before July 1, 1995, and produced at least 15 million gallons in the previous fiscal year may receive up to $450,000 in production incentives during the 2005-07 biennium. The cumulative state ethanol payment amount received by any single ethanol production facility may not exceed $10,000,000. (Reference North Dakota Century Code 4-14.1-07.1)

Quarterly Ethanol Production Incentive

The North Dakota Division of Community Services' Office of Renewable Energy and Energy Efficiency will provide a quarterly production incentive to each eligible facility based on a) the average North Dakota price per bushel of corn received by farmers during the quarter, and b) the average North Dakota rack price per gallon of ethanol during the quarter. The cumulative state ethanol payment amount received by any single ethanol production facility may not exceed $10,000,000. (Reference North Dakota Century Code 4-14.1-08 and 4-14.1-09)

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)

Biodiesel Loan Program

A biodiesel Partnership in Assisting Community Expansion (PACE) fund was established for the purpose of buying down the interest rate on loans made by a lead financial institution in participation with the Bank of North Dakota. The funds may be used for the following eligible projects: purchase of real property and equipment; expansion of facilities; working capital; and inventory. Biodiesel production facilities which are located in North Dakota and involved in production of diesel fuel containing at least 5% biodiesel and meet the specifications adopted by the American Society for Testing and Materials are eligible. (Reference North Dakota Century Code 6-09.17-02 through 6-09.17-04)

Point of Contact

Bob Humann
Senior Vice President of Lending
Bank of North Dakota
Phone (701) 328-5703 or (800) 472-2166 x5703
bhumann@nd.gov
http://www.banknd.com/ls/ls_commercial5.jsp
 

State Laws and Regulations

Biodiesel Equipment Tax Exemption

Equipment purchased by a facility to enable the sale of diesel fuel containing at least 2% biodiesel is exempt from sales tax. (Reference North Dakota Century Code 57-39.2-04)

Biodiesel Tax Reduction

The state excise tax of $0.23 per gallon imposed on all special fuels sold or used in the state is reduced by $0.0105 per gallon for the sale or delivery of diesel fuel that contains at least 2% biodiesel fuel by weight. A special excise tax of 2% is imposed on the sale of all special fuels. Effective through June 30, 2007, this tax is reduced by 1.9% on all sales of diesel fuel containing 2% biodiesel by weight. (Reference North Dakota Century Code 57-43.2-02 and 57-43.2-03)

Ethanol Fuel Tax Reduction

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, up to 1.2 million gallons. E85 fuel is defined as a petroleum product that is a blend of agriculturally derived denatured ethanol and gasoline or natural gasoline that typically contains 85% ethanol by volume, but at a minimum must contain 60% ethanol by volume. E85 produced for use as a motor fuel must comply with American Society for Testing and Materials specification D 5798-96. (Reference North Dakota Century Code 57-43.1-02)

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)

Utilities/Private Incentives

There are currently no known utility or private incentives offered in North Dakota

North Dakota Points of Contact: