Tool | November 2017

State-by-State Guide to Taxes on Retirees

North Dakota

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The Bottom Line
Map of North Dakota

Most Tax-Friendly

The Peace Garden State doesn't do much on behalf of retirees. While some property-tax breaks are available to those over 65, North Dakota is in the minority of states that tax at least some portion of Social Security benefits, and it offers no tax breaks for retirement income. And yet, income taxes are so low (and sales taxes modest) that North Dakota is one of .

State Sales Tax

5% state levy. Localities can add as much as 3.5%, and the average combined rate is 6.78%, according to the Tax Foundation. "New farm machinery, new farm machinery attachments or new irrigation equipment [used] exclusively for agricultural purposes" is taxed by the state at 3%. Local taxes may still apply.

Income Tax Range

Low: 1.10% (on up to $37,950 of taxable income for singles and up to $63,400 for married couples filing jointly)

High: 2.90% (on taxable income over $416,700)

Effective income tax rate: 1.10% single/ 1.56% married.

Social Security

Benefits are taxed to the same extent as on the federal tax return.

Exemptions for Other Retirement Income

North Dakota does not offer any retirement income tax breaks for seniors. Even out-of-state government pensions are fully taxed. Railroad Retirement income is exempt.

IRAs

Taxable at ordinary income tax rates.

401(k)s and Other Defined-Contribution Employer Retirement Plans

Taxable at ordinary income tax rates.

Private Pensions

Taxable at ordinary income tax rates.

Public Pensions

Taxable at ordinary income tax rates.

Property Taxes

Median property tax on North Dakota's median home value of $155,400 is $1,719, according to the Tax Foundation.

Tax breaks for seniors: 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.

Inheritance and Estate Taxes

There is no inheritance tax and no estate tax.