North Dakota Tax: Guide to Income, Sales, Property, and Retirement Taxes

North Dakota flag in the sky for North Dakota state tax — (Image credit: Getty Images)

Navigating the complexities of state taxes can be daunting, but understanding North Dakota's tax landscape is essential for residents and newcomers alike.

In this guide, we'll explore key components of The Peace Garden State's tax system, from income and sales taxes to property taxes and retirement benefits.

North Dakota state tax: Overview

North Dakota does have a state income tax, but the rate is lower than in many other states, which can be a welcome break for residents. The state also keeps alcohol and tobacco taxes on the low side, which helps keep certain costs in check.

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Property tax rates are about average, so homeowners are unlikely to face major surprises there.

Combined with the relatively low income tax, these factors can make North Dakota’s overall tax burden feel a bit lighter than in many other parts of the country.

[Data for this state tax guide was gathered from several sources including the U.S. Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]

North Dakota income tax

Red barn in a canola field in North Dakota

North Dakota has a graduated state individual income tax rate ranging from 1.95 percent to 2.50 percent.

North Dakota retirement taxes

North Dakota tax on retirement benefits: North Dakota doesn't tax Social Security retirement benefits.

The state doesn't tax Military pensions or Railroad Retirement benefits, either.

Tax on Taxable Income: Low of 0% (on up to $47,150 for single filers and $78,775 for joint filers) and a high of 2.5% (on more than $238,200 for single filers and $289,975 for joint filers)
- Social Security: Not taxable
- Pensions: Taxable (Excluding military retirement pay)
- 401(k) and IRA Distributions: Taxable

North Dakota sales tax

Still life of a small shopping cart with $1 USD bills

North Dakota's statewide sales tax is 5%. Localities can add up to 2.05%, but the average combined sales tax rate is 7.05%, according to the Tax Foundation.

Groceries: Exempt
Prescription drugs: Taxable
Clothing: Taxable

How much are property taxes in North Dakota?

In North Dakota, the average effective property tax rate is 0.94%, which is reasonable when compared to property taxes in many other states.

North Dakota Property Tax Breaks for Retirees

North Dakota Homestead Tax Credit or Renter's Refund: Some state residents can receive a property tax credit or a partial refund of rent they pay. The homestead tax credit could reduce a property's taxable value by up to $9,000. Renter's refunds are worth up to $400. Homeowners and renters must meet one of the following criteria to qualify.

Be 65 or older
Have a permanent or total disability

North Dakota gas tax

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Gasoline	$0.23 per gallon
Diesel	$0.23 per gallon

Source: Sales Tax Handbook

North Dakota alcohol and tobacco taxes

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North Dakota tobacco taxes
Product	Tax Amount
Cigarettes	$0.44 per pack
Chew Tobacco and Snuff	$0.16-$0.60 per ounce
Cigars and Tobacco	28% of wholesale price
Medical Marijuana	5%

Source: Sales Tax Handbook

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North Dakota alcohol taxes
Product	Tax Amount
Wine	$0.50 per gallon
Beer	$0.16 per gallon
Liquor	$2.50 per gallon

Source: Sales Tax Handbook

Note: Alcohol in North Dakota is also subject to a 7% sales tax.

North Dakota estate and inheritance taxes

North Dakota is one of the many states with no estate or inheritance taxes.

Katelyn has more than 6 years of experience working in tax and finance. While she specialized in tax content while working at Kiplinger from 2023 to 2024, Katelyn has also written for digital publications on topics including insurance, retirement, and financial planning and had financial advice commissioned by national print publications. She believes knowledge is the key to success and enjoys providing content that educates and informs.