Tool | September 2014
State-by-State Guide to Taxes on Retirees
State Sales Tax
5% (food, heating fuel, water, electricity and prescription drugs are exempt). Alcoholic beverages are taxed at 7%. New farm machinery, new irrigation equipment for agricultural use, and new mobile homes are taxed at 3%. Cities and counties that have adopted home-rule charters may levy additional sales and use taxes. The highest combined city and county local tax is 3%.
Income Tax Range
Low: 1.22% (on up to $36,250 of taxable income for singles and up to $60,650 for married couples filing jointly)
High: 3.22% (on taxable income over $398,350)
Benefits are taxed to the same extent as on the federal tax return.
Exemptions for Other Retirement Income
North Dakota does not offer any retirement-income tax breaks for seniors. Even out-of-state government pensions are fully taxed.
Property is subject to tax by the counties, school districts, townships and municipalities. The effective tax rate for property tax due and payable in 2014 is 1.27%.
Median property tax on the state's median home value of $116,800 is $1,658, according to the Tax Foundation.
Tax breaks for seniors: A Homestead Tax Credit is available to senior citizens (age 65 and older) who own or rent their home. For married couples, only one spouse may apply for the credit. Your income, plus the income of your spouse and any dependents, may not exceed $42,000 for the calendar year preceding the assessment date. Your assets cannot exceed $500,000, including your home's market value and any assets gifted or divested within three years. The size of the credit depends on your income; the maximum homestead credit is $4,500 of taxable value for those with income of $22,000 or less. For renters, the refund cannot exceed $400. You can receive the refund if 20% of your annual rent exceeds 4% of your income.
There is no inheritance tax and no estate tax.
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