North Dakota tax guide
North Dakota maintains one of the most favorable income tax climates in the United States, utilizing a lean two-bracket system. By capping the top marginal rate at 2.50%, the state ensures that a higher percentage of worker earnings remains in their pockets compared to the national average. This structure is designed to be straightforward for both employees and employers, minimizing the complexity often associated with progressive tax systems.
Key tax highlights
Payroll
- North Dakota utilizes a simple two-bracket progressive system that caps out at a maximum rate of 2.50%.
- The state provides generous tax relief measures that often result in a lower effective tax rate than the top marginal rate suggests.
- Employers in North Dakota are required to withhold state income tax based on the current progressive tables provided by the Office of State Tax Commissioner.
Local taxes
- North Dakota does not permit cities or counties to levy local income taxes, ensuring your paycheck remains free from municipal tax deductions.
Deductions
- The state allows taxpayers to utilize the same federal standard deduction amounts when calculating their North Dakota taxable income.
- North Dakota offers specific income tax credits for certain taxpayers, such as the marriage penalty credit, which can further reduce your total state tax liability.
Salary examples
Pre-computed take-home estimates at common salary levels. For example, a $75,000 salary in North Dakota yields about $61,075 after all deductions (81.4% take-home rate). Use the calculator above with your actual salary to see your specific estimate.
| Salary | Federal | State | FICA | Take-Home | Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $30 | $3,825 | $42,326 | 84.7% |
| $75,000 | $7,670 | $517 | $5,738 | $61,075 | 81.4% |
| $100,000 | $13,170 | $1,005 | $7,650 | $78,175 | 78.2% |
| $150,000 | $24,734 | $1,980 | $11,475 | $111,811 | 74.5% |
Neighboring states
How North Dakota compares with border states on income tax. At a $75,000 salary, a North Dakota worker pays $517 in state tax annually.
| State | Tax type | Top rate |
|---|---|---|
| South Dakota | no tax | No state income tax |
| Montana | progressive | 5.65% |
| Minnesota | high tax | 9.85% |
Tax tips for North Dakota
- Review your W-4 form annually to ensure your state withholding accurately reflects your current income bracket.
- Check eligibility for the North Dakota income tax credit for marriage, which is designed to offset the potential impact of filing jointly.
- Ensure you are properly claiming the state's exclusion for Social Security benefits to prevent over-withholding.
- Keep records of charitable contributions and medical expenses, as these may be deductible if you itemize on your federal and state returns.
Did you know?
- •North Dakota is one of the few states that has successfully maintained a simple two-bracket system while keeping the top rate below 3%.
- •Unlike Minnesota, which imposes a top rate of 9.85%, North Dakota residents enjoy a maximum tax burden that is significantly lower for high earners.
Filing guidance
When filing in North Dakota, start with your federal adjusted gross income as the foundation for your state return. You will then apply the state's specific modifications and credits. Residents should use the North Dakota Office of State Tax Commissioner’s online portal to ensure they are using the most current tax tables, as this is the most efficient way to process your return and claim any relevant tax credits. Always verify your residency status if you have recently moved, as this impacts whether you file as a full-year resident or a part-year resident.
Relocation context
Comparing North Dakota with nearby states can reveal whether paycheck differences are driven by state tax, local tax, or payroll deductions.