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 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
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.
Sign up for Kiplinger’s Free E-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.
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
Cigarettes | $0.44 per pack |
Chewing tobacco and snuff | $0.16 to $0.60 per ounce |
Other tobacco products | 28% 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 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.
-
Charitable Remainder Trust: The Stretch IRA Alternative
The SECURE Act killed the stretch IRA, but a properly constructed charitable remainder trust can deliver similar benefits, with some caveats.
By Brandon Mather, CFP®, CEPA, ChFEBC® Published
-
Three Ways to Take Control of Your Money During Financial Literacy Month
Budgeting, building an emergency fund and taking advantage of a multitude of workplace benefits can get you on track and keep you there.
By Craig Rubino Published
-
Retirees Face Significant Tax Bills Due to Fraud
Fraud A new report sheds light on how older adult scam victims end up with big tax bills and lost retirement savings.
By Kelley R. Taylor Last updated
-
Tax Day: Is the Post Office Open Late?
Tax Filing Tax Day means some people need to mail their federal income tax returns.
By Kelley R. Taylor Published
-
High Earners: Beware of These Illegal Schemes to Lower Taxes
Tax Schemes The IRS says high-income filers are targets for several illegal tax schemes.
By Katelyn Washington Last updated
-
Mailing Your Tax Return This Year? What to Know Before You Do
Tax Filing There are plenty of reasons not to mail your tax return this year, but here’s what you should know if you are.
By Katelyn Washington Last updated
-
IRS Warning: Beware of Smishing and 'Helper' Tax Scams
Scams Tax season is a time to look out for email and text message scams.
By Kelley R. Taylor Last updated
-
Most Expensive States to Live in for Homeowners
Property Taxes High property tax bills make the places on this list the most expensive states for homeowners to live in.
By Katelyn Washington Last updated
-
Don’t Miss This $2,500 Tax Break for Paying Your Student Loan
Tax Deductions Do you qualify for the student loan interest deduction this year?
By Katelyn Washington Last updated
-
How Much Richer Could You Be Without a Big Tax Refund?
Tax Refunds A big tax refund isn’t a reason to celebrate if you overpaid throughout the year. Here’s how much money your interest-free loan to the government could have cost you.
By Katelyn Washington Last updated