Bottom Line
Middle-Class Families: Most Tax-Friendly (Go to the Kiplinger Tax Map for Middle-Class Families)
Retirees: Tax-Friendly (Go to the Kiplinger Tax Map for Retirees)
Even though North Dakota imposes an income tax, the rates are low, especially for mid-level earners and retirees. Plus, for 2021 and 2022, a $350 nonrefundable credit is available for each resident ($700 for married couples).
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Sales taxes in the Peace Garden State are right around the national average, as are property taxes. 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 resident is on the light side when compared to all the other states.
North Dakota Income Taxes
North Dakota Income Tax Range
Low: 1.1% (on up to $40,525 of taxable income for singles and up to $67,700 for married couples filing jointly)
High: 2.9% (on taxable income over $445,000)
North Dakota Taxation of Social Security Benefits
Beginning in 2021, Social Security benefits are not taxed by the state. (Prior to 2021, Social Security benefits were 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.)
North Dakota Tax Breaks for Other Retirement Income
Military pensions and Railroad Retirement benefits are exempt.
North Dakota 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
North Dakota Real Property Taxes
In North Dakota, the median property tax rate is $989 per $100,000 of assessed home value.
North Dakota Property Tax Breaks for Retirees
A Homestead Tax Credit or Renter's Refund 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 $5,625 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.
North Dakota Motor Fuel Taxes
Gasoline: 23¢ per gallon.
Diesel: 23¢ per gallon.
North Dakota Sin Taxes
Cigarettes: $0.44 per pack
Cigars: 28% of the wholesale price
Chewing tobacco: $0.16 per ounce
Snuff: $0.60 per ounce
Beer: $0.16 per gallon
Wine: $0.50 per gallon
Liquor: $2.50 per gallon
All alcohol sales are also subject to a 7% sales tax.
North Dakota Estate and Inheritance Taxes
No estate or inheritance tax.
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