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SB 2261

AN ACT to create and enact a new section to chapter 57-38 and a new subdivision to subsection 7 of section 57-38-30.3 of the North Dakota Century Code, relating to a prison industries workforce development income tax credit; to provide for a legislative management study; and to provide an effective date.

69th Legislative Assembly (2025-26) Introduced by Jeff Barta and 4 co-sponsors

Creates a 10% ND income tax credit for primary-sector firms purchasing components or labor from prison industries to fund inmate workforce development, capped at $45,000/year.

Filed with Secretary Of State 04/08
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Bill Summary · SB 2261

Summary — SB 2261 (North Dakota)

Title: Creates a prison industries workforce development income tax credit; requires a legislative management study; effective date provisions.

Main purpose

SB 2261 establishes a state income tax credit to encourage primary‑sector businesses to purchase components or subcontract labor from prison industries as part of workforce development for incarcerated individuals. The bill also directs a legislative management study on prison industries and workforce development programs.

Key provisions

  • Creates a new “Prison industries workforce development credit” in chapter 57‑38 of the North Dakota Century Code (and adds a corresponding subdivision to section 57‑38‑30.3).
  • Credit amount: 10% of the cost of components and/or labor purchased from prison industries in the calendar year.
  • Eligibility: Taxpayers that are “primary sector businesses” (as defined in NDCC §1‑01‑49).
  • Nonrefundable at the taxpayer level; unused credit may be carried forward up to five succeeding taxable years.
  • Annual statewide cap: $45,000 of aggregate credits allowed per calendar year.
    • If aggregate claims exceed $45,000, the Tax Commissioner prorates available credits among claimants.
    • If aggregate claims are less than $45,000, remaining (unclaimed) credits may be carried forward and made available in the succeeding calendar year.
  • Treatment for groups and passthroughs:
    • Corporations filing a North Dakota consolidated return may claim the credit against the group’s aggregate ND tax liability.
    • Pass‑through entities compute the credit at the entity level; the credit then flows through to partners/shareholders/members pro rata. Individuals claim passthrough credits under §57‑38‑30.3.
  • Restriction: Purchases used to generate this credit cannot be used to compute any other income tax deduction or credit under the chapter.
  • Administration: Applicants must provide documentation to the Tax Commissioner by January 31 following the calendar year of purchases (name/address/FEIN or SSN; substantiation of primary sector designation from Dept. of Commerce; copy of paid invoice identifying components or labor; description). The Tax Commissioner prescribes forms and will notify applicants of credit amounts after January 31.

Legislative study

  • Directs the Legislative Management to study prison industries and workforce development during the 2025–26 interim, including alignment with manufacturing and private‑sector industries and post‑release outcomes. Findings and recommended legislation are to be reported to the 70th Legislative Assembly.

Effective date and timeline

  • Sections 1 and 2 are effective for taxable years beginning after December 31, 2024.
  • Procedural status (selected): Introduced March 11, 2025; committee action and amendments were performed (Industry & Business Committee); filed with the Secretary of State April 8, 2025. (See official legislative record for complete action history.)

Who is affected / potential impact

  • Direct beneficiaries: primary‑sector businesses that purchase components or contract labor from state prison industries; prison industries and incarcerated workers (via workforce development opportunities).
  • Fiscal impact: limited by the $45,000 annual statewide cap, implying a modest direct revenue cost to the state; administrative workload for Tax Commissioner to process applications and prorate allocations when necessary.
  • Policy implications: incentivizes public‑private linkage between manufacturing businesses and prison industries to support inmate job training and transition to employment.

Compiled from official sources — confirm details with the bill’s official record.

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