North Dakota Income Tax Calculator

Overview of North Dakota Taxes: North Dakota has a progressive income tax that is among the lowest in the country. In fact, the top marginal rate is the lowest of any state that has an income tax. North Dakota’s total sales tax (state and local rates combined) ranks in the bottom half of the country while property taxes are below the national median.

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Taxes in North Dakota

North Dakota State Tax Quick Facts

• Income tax: 0% – 2.5%
• Sales tax: 5% – 8.5%
• Property tax: 0.96% median effective rate
• Gas tax: 23.03 cents per gallon of regular gasoline

The booming economy in North Dakota in recent years has allowed the state to significantly cut taxes. The current income tax rates are the lowest in the country, ranging from 0% to 2.5%. The state’s sales taxes stand below the national average. When accounting for local rates, the average sales tax in the Roughrider State is 6.071%.

The state’s effective property tax rate (median property taxes as a percentage of the median home value) is 0.96%. Of course, the financial impact of that tax and others in North Dakota depends on individual taxpayer circumstances.

A financial advisor can help you understand how taxes fit into your overall financial goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Not a North Dakota taxpayer yet, but planning a move to the Peace Garden State? If you’re planning on using a mortgage to purchase a home, take a look at our comprehensive North Dakota mortgage guide to learn more about rates and the details of getting a mortgage in the state.

North Dakota Income Taxes

After several rounds of tax cuts in recent years, North Dakota has some of the lowest state income tax rates in the country. The top marginal rate now sits at 2.5%. Not everyone pays that rate, however. Lower earners pay lower rates, depending on their income tax bracket. The table below shows brackets for all filing statuses in North Dakota.

Income Tax Brackets

North Dakota taxable income is pretty similar to federal taxable income. A number of items that are taxed federally can be subtracted from taxable income in North Dakota. Interest from U.S. government obligations such as U.S. savings bonds is exempt, as is active duty pay from the National Guard or U.S. armed forces. You can also subtract contributions to a North Dakota College SAVE account, up to $5,000 for single filers and $10,000 for joint filers. In addition, some capital gains can be excluded.

You could consider hiring a professional accountant or looking into tax preparation software to help file your returns.

As of the 2021 tax year, North Dakota no longer taxes Social Security benefits.

North Dakota Capital Gains Tax

Capital gains are included as taxable income in North Dakota; however, long-term gains may be eligible for the North Dakota net long-term gain exclusion. The exclusion is equal to 40% of your net long-term gains. To calculate the exclusion, take the smaller of net long-term gains and net long-term gains less net short-term losses (these can be found on IRS form 1040, Schedule D) and multiply it by 0.4.

North Dakota Sales Tax

Sales taxes are one of North Dakota’s most important sources of revenue. The statewide sales tax rate is 5%, but many counties and cities collect additional local option sales taxes, with rates as high as 3.5%. That means the highest rate possible in North Dakota is 8.5%. The table below shows state and local rates for every county in the state.

Sales Tax Rates (Updated January 2025)

The total tax rates above apply to “tangible personal property” sold in the state. This includes most consumer products and household goods. Some services are also taxed, including deliveries of taxable items, communications services and construction or assembly of a taxable item.

Motor vehicles are subject to a separate excise tax of 5%, and are not subject to the local tax rates shown above. Food that is purchased for consumption at home is exempt, but prepared food is not.

Unlike many other states, North Dakota does not exempt clothing, prescription medications or over-the-counter drugs from sales tax. Fortunately, groceries are not taxed.

North Dakota Gas Tax

Want to drive from Fargo to Williston? It’s a beautiful drive, but you’ll want to keep in mind state and federal gas taxes you have to pay along the way. North Dakota’s gas tax is 23.03 cents per gallon. 

North Dakota Cigarette Tax

North Dakota smokers pay some of the lowest cigarette taxes in the U.S. The state excise tax on a pack of cigarettes is 44 cents per pack of 20. In addition to that excise tax, the general sales tax still applies. Sales tax is applied to the total cost of the cigarettes, which includes the excise tax.

North Dakota Alcohol Tax

North Dakota collects an excise tax on alcoholic beverages, with rates varying depending on the type of alcohol being sold. Beer is taxed at a rate of 43 cents per gallon. The tax on liquor is $4.93 per gallon.

North Dakota Estate Tax

While North Dakota does have an estate tax statute, an estate tax return must be filed within 15 months of a person’s death.

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