State Income Tax

Income Tax in North Dakota: Complete Guide 2026

Updated 2026-03-11

Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.

Income Tax in North Dakota: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

North Dakota imposes one of the lowest income tax rates in the country. Following recent tax reform legislation, the state has moved to a flat rate structure of approximately ~1.95% for 2026, significantly simplifying what was previously a five-bracket graduated system. North Dakota’s low rate is supported by substantial oil and gas revenues that fund a large share of state operations. Combined with no local income taxes, North Dakota’s income tax burden is among the lightest for any state that imposes an income tax.

North Dakota Income Tax Rates (2026)

ComponentRate / Amount
Flat income tax rate~1.95%
Standard deduction (single)~$14,600
Standard deduction (married filing jointly)~$29,200

North Dakota conforms to the federal standard deduction and uses federal taxable income as the starting point for computing state tax.

How North Dakota Income Tax Works

Flat Rate Transition

North Dakota previously used a five-bracket graduated system with rates ranging from ~1.1% to ~2.9%. Recent legislation consolidated these into a single flat rate of ~1.95%. The first ~$44,725 of taxable income for single filers (or ~$89,450 for joint filers) is exempt from tax under the new structure, effectively creating a zero bracket for lower-income earners.

Federal Conformity

North Dakota uses federal taxable income (after the standard or itemized deduction) as the starting point. This high level of federal conformity simplifies filing. Key North Dakota-specific adjustments include:

  • Addition: Income from state and local bonds of other states
  • Subtraction: Social Security benefits included in federal taxable income
  • Subtraction: Qualifying retirement income for eligible filers
  • Subtraction: Interest from U.S. government obligations

Key Exclusions

  • Social Security: Fully exempt from North Dakota income tax (subtracted from federal taxable income)
  • Military retirement: Fully exempt
  • Retirement income exclusion: Filers may exclude a portion of qualifying pension and retirement income
  • Native American reservation income: Income earned by enrolled members on their reservation is exempt

Tax Credits

  1. Earned income credit: Not available at the state level
  2. Child tax credit: North Dakota does not offer a separate state child tax credit
  3. Renaissance zone credit: For residents and businesses in designated renaissance zones
  4. Seed capital investment credit: ~45% of investments in qualifying North Dakota businesses
  5. Endowment tax credit: ~40% of charitable contributions to qualifying North Dakota endowments, up to ~$25,000 per year

Who Must File in North Dakota

You must file a North Dakota return if:

  • You are a resident with federal taxable income exceeding the exempt amount (~$44,725 single; ~$89,450 joint)
  • You are a part-year resident or nonresident with North Dakota-source income
  • You want to claim credits or a refund of withholding

North Dakota uses Form ND-1 for all filers. The filing deadline is April 15.

Comparison to National Average

StateIncome Tax RateStructure
North Dakota~1.95%Flat
South Dakota~0%No income tax
Montana~5.9% (top)Graduated
Minnesota~9.85% (top)Graduated
Wyoming~0%No income tax
National average~4.60%Varies

North Dakota’s flat rate of ~1.95% is the lowest among states that impose an income tax. Neighboring South Dakota and Wyoming have no income tax at all, but North Dakota’s minimal rate, combined with no local income taxes and generous exemptions, makes the effective burden negligible for many residents.

Tips for Minimizing North Dakota Income Tax

  1. Verify the zero-bracket exemption. If your federal taxable income is below ~$44,725 (single) or ~$89,450 (joint), you may owe no North Dakota income tax at all under the new structure.

  2. Claim the endowment tax credit. Contributions to qualifying North Dakota endowments generate a ~40% credit, up to ~$25,000 per year, one of the most generous charitable credits in any state.

  3. Ensure Social Security exclusion is applied. North Dakota fully exempts Social Security benefits. Verify that this subtraction appears on your return.

  4. Explore renaissance zone incentives. Residents of designated renaissance zones may be eligible for income tax exemptions on a portion of their income.

  5. Maximize retirement contributions. While North Dakota’s rate is already very low, reducing federal taxable income through 401(k) and IRA contributions further reduces your North Dakota liability.

  6. Review Native American exemption eligibility. Enrolled tribal members earning income on their reservation should claim the exemption for qualifying income.

  7. Consider the seed capital investment credit. Investments in qualifying North Dakota startups can generate a credit of ~45%, providing both economic development and tax benefits.

Key Takeaways

  • North Dakota imposes a flat income tax of ~1.95%, the lowest rate among states with an income tax
  • A zero bracket exempts the first ~$44,725 (single) or ~$89,450 (joint) of federal taxable income
  • Social Security and military retirement are fully exempt from state tax
  • The endowment tax credit provides ~40% of qualifying charitable contributions, up to ~$25,000
  • Oil and gas revenues enable North Dakota to maintain low income tax rates
  • No local income taxes are imposed anywhere in the state

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