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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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
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
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
Gasoline | $0.23 per gallon |
Diesel | $0.23 per gallon |
Source: Sales Tax Handbook
North Dakota alcohol and 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
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.
Related Content
-
Should You Tap Your Home Equity Before 2026?As borrowing rates and tax law shifts converge, here's what homeowners need to know before pulling equity out of their home.
-
What Investors May Face in the New Year: InterviewKeith Lerner, the chief market strategist and chief investment officer for Truist Wealth, speaks with Kiplinger.
-
My adult child was laid off. Can we discuss it without ruining the holidays?We asked mental health and financial experts for advice.
-
Costco Sues Over Trump Tariffs: What Could That Mean for Prices in 2026?Tariffs The retailer is making headlines not just for its famous hot dog and gold bars but for suing the Trump administration over tariffs.
-
Taxes on Social Security Benefits: Do You Know the Rules?Quiz Social Security benefits often come with confusing IRS tax rules that can trip up financially savvy retirees and near-retirees.
-
How Are I Bonds Taxed? 8 Common Situations to KnowBonds Series I U.S. savings bonds are a popular investment, but the federal income tax consequences are anything but straightforward.
-
New 2026 Tax Change Could Mean More for Your IRA and 401(k) SavingsRetirement Savings Here's how the new IRS inflation adjustments will increase the contribution limits for your 401(k) and IRA in the new year.
-
Capital Gains Tax Quiz: How Well Do You Really Know IRS Investment Tax Rules?Quiz Take our capital gains tax quiz to test your investment taxes knowledge. Learn about loss rules, holding periods, and tax incentives that could impact your savings.
-
6 Tax Reasons to Convert Your IRA to a Roth (and When You Shouldn't)Retirement Taxes Here’s how converting your traditional retirement account to a Roth IRA can boost your nest egg — but avoid these costly scenarios.
-
Could Tax Savings Make a 50-Year Mortgage Worth It?Buying a Home The 50-year mortgage proposal by Trump aims to address the housing affordability crisis with lower monthly mortgage payments. But what does that mean for your taxes?
-
3 Ways High-Income Earners Can Maximize Their Charitable Donations in 2025Tax Deductions New charitable giving tax rules will soon lower your deduction for donations to charity — here’s what you should do now.
