Across the country, property taxes have become one of the biggest concerns for homeowners. Rising home values are great for building equity, but they often come with higher tax bills. Because of that, several states are now debating ways to reduce or even eliminate property taxes altogether.
North Dakota is one of the few places where that conversation might actually have a realistic financial path.
Instead of trying to eliminate property taxes overnight, the state has started working toward a long-term strategy that could significantly reduce property taxes on primary residences over time. For homeowners and buyers in the Fargo, West Fargo, and Horace real estate markets, this is something worth paying attention to because it could change the long-term cost of owning a home here.
At the center of North Dakota’s property tax strategy is something many people have heard of but may not fully understand — the North Dakota Legacy Fund.
The Legacy Fund was created by voters in 2010 and is built from the state’s oil and gas revenue.
A few key details explain why it plays such an important role:
If the fund earns around 5–7% annually, that could generate hundreds of millions of dollars each year. Over time, those investment earnings could help replace a portion of the revenue currently collected through property taxes.
That is the basic idea behind the plan.
Rather than eliminating property taxes immediately, the state is taking a gradual approach designed to reduce taxes over time while keeping funding stable for schools and local services.
The current steps in the plan include:
If the fund continues to grow and produce strong investment returns, the tax credit could eventually offset most — or potentially all — property taxes on primary residences.
This approach gives lawmakers the ability to adjust the plan over time while still moving toward lower property taxes for homeowners.
Many states talk about eliminating property taxes, but very few actually have the financial structure to attempt it. North Dakota is different for a few important reasons.
North Dakota has roughly 780,000 residents and about 300,000 households.
Compared with large states like Texas, Florida, or Illinois, the total amount of property tax revenue that would need to be replaced is much smaller. That makes the math behind a long-term reduction far more realistic.
North Dakota remains one of the top oil-producing states in the United States, thanks to production in the Bakken formation.
Oil tax revenue continues feeding the Legacy Fund, which allows the principal to grow and produce more investment income each year.
In many states, local governments rely heavily on property taxes to fund schools and infrastructure.
North Dakota already provides a significant portion of funding for those services at the state level, which makes it easier to reduce reliance on property taxes compared to other states.
The first stage of the policy is already producing noticeable results.
For example:
While the long-term goal will take years to play out, these early results show how the system can start reducing property taxes gradually.
If property taxes continue to decrease over time, the economics of homeownership could shift in a meaningful way.
Lower property taxes can change how people evaluate the cost of owning a home compared to renting. That could influence several things in the housing market.
Potential long-term effects include:
For buyers considering moving to North Dakota, lower property taxes could make homeownership here even more attractive.
The full impact of this policy will take time to develop, but the direction is already starting to shape conversations around North Dakota real estate and homeownership costs.
For buyers, it could mean lower long-term ownership costs compared to many other parts of the country.
For homeowners, it could support stronger demand and long-term property values as the market becomes more attractive to new buyers.
North Dakota is one of the few states in the country with a financial structure that could realistically reduce property taxes significantly over time. The combination of energy revenue, a large investment fund, and a relatively small population makes the long-term strategy possible.
While the plan will take years to fully develop, the first steps are already happening.
For anyone buying or selling a home in the Fargo–Moorhead real estate market, it is something worth keeping an eye on because it could influence the long-term cost of homeownership in our region.
If you have questions about buying a home in Fargo, West Fargo, Horace, or Moorhead — or how changing property taxes could affect the market — I’m always happy to talk.
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