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Taxes in North Dakota
From low income tax rates and broad retirement income exemptions to modest property taxes and targeted senior credits, North Dakota offers a generally tax-friendly environment for retirees despite a few income-based limitations.
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At a glance:
- North Dakota has low income tax rates and a generally moderate overall tax burden for retirees.
- Property taxes are below average, with meaningful relief programs for seniors and disabled residents.
- Social Security and military retirement income are largely exempt, though some pension income may be partially taxed.
North Dakota imposes an income tax, but the fees are reasonable. Below, we explain various North Dakota state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
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North Dakota Tax Rates
| State Sales Tax | 5% |
| Avg State/Local Sales Tax | 7.04% |
| Gas Tax | $0.23 per gallon |
| Diesel Tax | $0.40 per gallon |
| Cigarette Tax | $0.44 per pack |
| Income Tax | 2.5% |
| Effective Tax Rate | 1.89% |
| Property Tax | 0.97% |
| Social Security Tax | None |
| Medical/Dental Deduction | Full |
| Federal Income Tax Deduction | None |
| Retirement Tax | Partial |
North Dakota Tax Rates Explained
North Dakota Sales Tax
The state levies a 5% tax (food and prescription drugs exempt) and 7% on alcoholic beverages. Cities or counties which have adopted home rule charters may levy additional sales and use taxes up to 3.5%.
North Dakota Income Tax
Individual income taxes top out at 2.5%.
North Dakota Property Taxes
All North Dakota real property is subject to tax by the state, counties, townships and municipalities. The effective tax rate for North Dakota residential property is 0.97%, or $2,572 on a $265,189 home. Mobile homes used as a residence or places of business are subject to a property tax.
North Dakota’s Homestead Tax Credit is available to those aged 65 or older or disabled persons who own or rent their homes. Total annual household income, including from a spouse and any dependents, must be $70,000 or less for the calendar year. Eligible seniors receive a property tax credit of 10% to 100%, up to a maximum of $9,000. See North Dakota Tax Refunds, Exemptions and Credits for more information.
North Dakota Retirement Taxes
Taxpayers can exclude $5,000 of pension income from military, civil service, some state or local government and qualified plans. The exclusion is reduced by the amount of Social Security income received. North Dakota fully taxes out-of-state government pensions. All military retirement income is exempt from North Dakota state income tax.
North Dakota Inheritance and Estate Taxes
North Dakota has no state inheritance or estate tax. There is an estate tax based on a decedent’s total gross estate and limited to the credit for state death taxes allowed on the Federal 706 estate tax return. North Dakota’s definition of a deceased person’s taxable estate is identical to the federal definition, and North Dakota recognizes all federal exemptions and deductions.
For further information, visit the North Dakota State Tax Department.