State-by-State Guide to Taxes on Retirees
Tool | December 2020

North Dakota State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.

North Dakota

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The Bottom Line
Flag of North Dakota

Mixed Tax Picture

The Peace Garden State could do better when it comes to keeping taxes low on retirees. North Dakota is one of only a handful of states that tax at least some portion of Social Security benefits. Other than an exemption for military retirement pay, it offers no tax breaks for other common forms of retirement income, such as private or public pensions, 401(k) funds and IRA distributions. Fortunately, the income tax rates are so low that most North Dakota retirees still don't get outrageous income tax bills.

Sales taxes are right around the national average, while property taxes are a bit above. There are no estate or inheritance taxes to worry about, either. When it's all added up, the typical tax burden for a North Dakota retiree is pretty much in the middle when compared to all the other states.

Income Tax Range

Low: 1.1% (on up to $40,125 of taxable income for singles and up to $67,050 for married couples filing jointly)

High: 2.9% (on taxable income over $440,600)

Taxation of Social Security Benefits

Social Security benefits are not taxed for joint filers with a federal adjusted gross income of $100,000 or less and other taxpayers with a federal AGI of $50,000 or less. For taxpayers exceeding these thresholds, Social Security benefits are taxed by North Dakota to the same extent they are taxed at the federal level.

Tax Breaks for Other Retirement Income

Military pensions and Railroad Retirement benefits are exempt.

Sales Tax

5% state levy. Localities can add as much as 3.5%, and the average combined rate is 6.96%, according to the Tax Foundation.

Groceries: Exempt
Clothing: Taxable
Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 5% excise tax
Prescription Drugs: Exempt

Real Property Taxes

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.

Annual Car Taxes and Fees

No annual vehicle tax or fee is imposed.

Estate and Inheritance Taxes

No estate or inheritance tax.

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