North Dakota State Tax Guide

North Dakota state tax rates and rules for income, sales, property, fuel, cigarette, and other taxes that impact residents.

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

North Dakota state tax: Overview

North Dakota has a state income tax, but the rate is low compared to other states, and recent legislation lowers the income tax rate for 2023. Additionally, the state's alcohol and tobacco taxes are low, and the property tax rates are on par with those in other states.

[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 taxes

Red barn in a canola field in North Dakota

(Image credit: Getty Images)

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.

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North Dakota Income Tax Range

Due to new legislation in 2023, there is no state income tax for single filers with taxable income up to $41,775.  Joint filers with taxable income below $69,700 won't pay state income tax, either.

North Dakota also lowered the tax rates for its higher income tax brackets. So, the most state income tax you'll pay is 2.5%.

North Dakota Sales Tax

North Dakota's statewide sales tax is 5%. Localities can add up to 3.5%, but the average combined sales tax rate is 6.97%, according to the Tax Foundation.

  • Groceries are tax-exempt.
  • Prescription drugs are tax-exempt.
  • Diapers will become tax-exempt on July 1, 2023.

How Much Are Property Taxes in North Dakota?

In North Dakota, the average effective property tax rate is 1%, 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

Note: North Dakota has other qualifying criteria for claiming the tax credit or refund, including income thresholds.

North Dakota Motor Vehicle Taxes

Motor vehicle purchases are taxed at 5%.

North Dakota taxes gasoline at $0.23 per gallon.

North Dakota Alcohol and Tobacco Taxes

Swipe to scroll horizontally
Cigarettes$0.44 per pack
Chewing tobacco and snuff$0.16 to $0.60 per ounce
Other tobacco products28% of wholesale price
Beer$0.16 per gallon
Wine$0.50 per gallon
Liquor$2.50 per gallon

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 Washington
Tax Writer

Katelyn has more than 6 years’ experience working in tax and finance. While she specializes in tax content, Katelyn has also written for digital publications on topics including insurance, retirement and financial planning and has had financial advice commissioned by national print publications. She believes that knowledge is the key to success and enjoys helping others reach their goals by providing content that educates and informs.