Taxes in North Dakota: State Tax Guide 2026
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Taxes in North Dakota: State Tax Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
North Dakota has one of the lowest income tax rates in the nation among states that levy an income tax. In 2023, the state enacted major tax reform that effectively eliminated income tax for most residents by increasing the standard deduction and reducing rates. Combined with moderate sales and property taxes, North Dakota offers one of the lightest overall tax burdens in the country, fueled in part by oil revenue that offsets the need for higher individual taxes.
North Dakota Income Tax Rates (2026)
Following 2023 tax reform (HB 1158), North Dakota dramatically simplified its income tax:
| Tax Rate | Taxable Income Range |
|---|---|
| 0.00% | $0 – ~$44,725 (single) |
| 1.50% | Over ~$44,725 (single) |
For married filing jointly, the 0% bracket extends to ~$74,750.
The 2023 reform effectively eliminated income tax for the vast majority of North Dakota residents. Only those with taxable income above the threshold pay any state income tax, and at just 1.50% — the second-lowest rate among states with an income tax.
North Dakota Standard Deduction (2026)
North Dakota conforms to the federal standard deduction:
| Filing Status | Amount |
|---|---|
| Single | ~$15,000 |
| Married Filing Jointly | ~$30,000 |
| Head of Household | ~$22,500 |
With the generous 0% bracket and federal standard deduction conformity, a single filer earning ~$59,725 or less (standard deduction + 0% bracket) effectively pays zero North Dakota income tax.
Notable North Dakota Tax Credits
- Marriage Penalty Credit: Credit to reduce the impact of the marriage penalty for two-income households
- Renaissance Zone Credits: Income tax exemptions for businesses and residents in designated Renaissance Zones (available in many North Dakota cities)
- Endowment Tax Credit: 40% credit for charitable contributions to North Dakota qualified endowments (up to ~$25,000 per individual per year)
- Seed Capital Investment Credit: 45% credit for investments in ND-certified new or expanding businesses
- Workforce Recruitment Credit: Credit for employers who reimburse employees’ student loan payments
- Geothermal, Solar, and Wind Credit: Credits for installation of alternative energy systems
Sales Tax
| Component | Rate |
|---|---|
| State base rate | 5.00% |
| Average combined (state + local) | ~6.96% |
| Maximum combined rate | ~8.50% (some cities) |
Cities in North Dakota can impose local sales taxes of up to 3.5%. Fargo has a combined rate of ~7.50% and Bismarck ~7.50%.
Exempt from sales tax: Prescription medications. Groceries are taxable in North Dakota.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~0.98% |
| National average | 0.99% |
North Dakota property taxes are almost exactly at the national average. The state uses a unique system where property is assessed at 50% of true and full value, with mill levies applied to that assessed value.
Exemptions and Programs
- Homestead Credit: Reduces property taxes for qualifying homeowners 65+ or permanently disabled with income below ~$42,000 — can reduce taxes by up to 100%
- Disabled Veterans Credit: Up to ~$8,100 property tax credit for veterans with service-connected disabilities
- Blind Persons Exemption: Additional exemption for legally blind property owners
Example: A home valued at $300,000 (assessed at $150,000) with a typical mill levy pays approximately ~$2,940 in annual property taxes.
How North Dakota Compares to National Averages
| Tax Type | North Dakota | National Average |
|---|---|---|
| Top income tax rate | 1.50% | ~5.0% |
| Effective rate (~$75K single) | ~0.5% | ~3.5% |
| Sales tax (combined avg) | ~6.96% | 6.6% |
| Property tax (effective) | ~0.98% | 0.99% |
| Overall tax burden rank | Bottom 10 (lowest) | — |
Who Benefits from Living in North Dakota
North Dakota may work well for:
- Most wage earners — Effectively zero income tax for individuals earning under ~$59,725 and just 1.50% above that
- High earners — Even the wealthiest North Dakotans pay only 1.50% state income tax, one of the lowest rates in the nation
- Retirees — No tax on Social Security, minimal income tax on other retirement income, and homestead credits for seniors
- Charitable donors — The 40% Endowment Tax Credit is one of the most generous charitable giving incentives nationwide
- Investors — The 45% Seed Capital Investment Credit makes North Dakota attractive for startup investment
North Dakota may be costly for:
- Grocery shoppers — North Dakota taxes groceries at the full state sales tax rate
- Consumers in cities with high local taxes — Combined sales tax above 7% in Fargo, Bismarck, and other cities
- Property owners in oil-boom areas — Rapid development in western North Dakota has pushed property values and tax bills higher
- Non-homesteaded property owners — No exemptions available for investment or commercial property
North Dakota-Specific Considerations
- No tax on Social Security benefits — North Dakota fully exempts Social Security income from state tax
- Oil extraction tax — North Dakota imposes an 11.5% oil extraction tax, which funds state services and reduces reliance on individual taxes
- Renaissance Zones — Designated zones in many cities offer income tax exemptions and property tax exemptions for up to 5 years for new residents and businesses
- No state estate or inheritance tax — North Dakota does not impose either tax
- Federal conformity — North Dakota starts with federal taxable income, simplifying state filing
- Agricultural property — Agricultural land is assessed based on its agricultural value, not market value, reducing property taxes for farmers and ranchers
- Energy sector impact — Oil revenue significantly subsidizes state spending, keeping individual tax rates low
Key Takeaways
- North Dakota effectively eliminated income tax for most residents; those above the threshold pay just 1.50%
- The 40% Endowment Tax Credit for charitable donations is among the most generous in the nation
- Sales tax averages ~6.96% combined, with groceries fully taxable
- Property taxes are at the national average (~0.98%), with generous homestead credits for seniors
- No state tax on Social Security benefits and no estate or inheritance tax
- Oil revenue keeps North Dakota’s individual tax rates among the lowest in the country
Next Steps
- See how North Dakota compares at State Income Tax Comparison: All 50 States Ranked
- Calculate your federal bracket with the Tax Bracket Calculator 2026
- Explore deductions available to you — Tax Deductions You’re Probably Missing (Itemized vs Standard)
- Find a North Dakota CPA — Find a CPA Near You
- Consider tax-efficient strategies — Tax Planning Consultation