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North Dakota Tax Guide: Ultra-Low Income Tax

Learn about North Dakota's near-zero income tax rates, sales tax obligations, and property tax details for 2025.

2.5%
Top Income Tax Rate
6.96%
Combined Sales Tax
0.98%
Property Tax Rate
#43
Tax Burden Rank

Tax Overview

North Dakota has some of the lowest income tax rates of any state that levies one, with a top rate of just 2.5% and an exemption for taxpayers with taxable income below $44,725. Many North Dakota residents effectively pay little to no state income tax. The state has been able to keep rates low thanks to substantial revenue from oil extraction taxes and related energy industry activity.

Sales tax in North Dakota is moderate, with a state rate of 5% and local additions that push the combined rate to about 6.96% on average. The state exempts groceries and prescription drugs from sales tax. North Dakota's overall tax burden is among the lightest in the nation.

Property taxes in North Dakota have been a growing concern as energy-driven economic growth has increased property values. The effective rate is around 0.98%. The state offers a homestead property tax credit for qualifying homeowners, a disabled veteran exemption, and a rent/property tax refund for low-income elderly and disabled residents. North Dakota voters have rejected ballot measures to eliminate property taxes entirely.

Income Tax

North Dakota effectively exempts the first $44,725 of income from tax, and its top rate of 2.5% is among the lowest of any state with an income tax.

Income RangeTax Rate
$0 – $44,7250%
$44,726 – $225,9751.95%
$225,976 +2.50%

Sales Tax

State Rate5.00%
Avg. Local Rate1.96%
Combined Rate6.96%

Property Tax

Effective Rate0.98%
Median Annual Bill$2,092

Key Deductions in North Dakota

  • ✓First $44,725 of taxable income exempt from state tax
  • ✓Homestead property tax credit for qualifying homeowners
  • ✓Disabled veteran property tax exemption
  • ✓Rent/property tax refund for elderly and disabled
  • ✓Renaissance zone tax exemptions for qualifying investments
  • ✓Charitable contribution carry-forward provisions

Filing Information

Filing Deadline: April 15

Tax Authority: North Dakota Office of State Tax Commissioner

Phone: (701) 328-1247

Website: https://www.tax.nd.gov

Frequently Asked Questions

Do most North Dakota residents pay state income tax?
Many North Dakota residents pay little or no state income tax due to the generous $44,725 exemption. Only income above this threshold is taxed, and the rates of 1.95% and 2.5% are among the lowest in the nation.
How does oil revenue affect North Dakota taxes?
Substantial revenue from oil extraction taxes and energy industry activity allows North Dakota to maintain very low income tax rates. The state has used energy revenues to build reserves and fund services without high personal taxes.
Does North Dakota tax Social Security?
North Dakota does not tax Social Security benefits at the state level. Combined with the very low income tax rates on other income, North Dakota is quite tax-friendly for retirees.
Are groceries taxed in North Dakota?
No, North Dakota exempts most grocery food items from the state sales tax. Prepared food, soft drinks, and candy are taxable, but basic groceries for home consumption are exempt.

Neighboring State Guides

MontanaSouth DakotaMinnesota

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