The Senate Finance and Tax Committee heard testimony on House Bill 1107, a bill to exempt Segal AmeriCorps education awards from North Dakota state income tax, but after a tie vote and follow-up motions the committee issued no recommendation.

Representative Dave Munson, R-District 19, introduced the bill and said the measure is intended to encourage volunteerism through AmeriCorps by relieving members of state income tax on the education award they earn for completing service. "It would not, they would not have to pay income tax on the grants that they got," Munson said in opening remarks.

The bill’s principal witness, Katie Ralston Howell, director of the Workforce Division at the Department of Commerce, told the committee the Segal AmeriCorps Education Award is granted to members who complete a term of service (300–1,700 hours) and can be used for college costs or to repay qualified student loans. "Currently, the award is taxed as annual gross income regardless of how it's used. This can create an unfair financial burden for AmeriCorps members, forcing some to delay or abandon their education," Ralston Howell said. She said about 115 North Dakotans each year receive an education award ranging from roughly $1,500 to $7,300 and that the award is also taxed federally.

Department staff and committee members described typical AmeriCorps roles in the state — reading and math tutors placed through the Southeast Education Cooperative and members working with StrengthenND and local job development authorities — and noted that members receive a small stipend in addition to the education award. Ryan Volk of the Department of Commerce told senators Standing Rock has a GED AmeriCorps program with about 10 members and that tribal communities participate through multiple program routes.

Senators questioned whether many recipients would owe state income tax under North Dakota’s current brackets. Vice Chair Romo and others noted that three of five North Dakotans pay no state income tax under the current structure, and one senator’s estimate put the state tax on a largest award (about $7,395) at roughly $144 for a single filer. Ralston Howell acknowledged many recipients — including students and retired members who defer awards — may have low taxable income, but she said exempting the award would allow members to receive the full benefit.

On the committee floor, Senator Marshallay moved that the committee "do pass" HB 1107; Senator Wallen seconded. The roll call produced a tie. Senator Patton then moved a "do not pass," seconded by Senator Rummel; that motion’s roll produced a recommendation of no committee action. The committee subsequently moved to record that it would have no recommendation and designated a senator to carry the bill forward. No final legislative action was taken by the committee during the hearing.

The hearing record shows support from Department of Commerce staff and no registered opposition presented to the committee during the session. The committee’s action leaves the bill without a recommendation from the Finance and Tax Committee as of the close of the hearing.