Taxes in North Dakota
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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||6.96%|
|Gas Tax||$0.23 per gallon|
|Diesel Tax||$0.23 per gallon|
|Cigarette Tax||$0.44 per pack|
|Effective Tax Rate:||1.89%|
|Social Security Tax||None|
|Federal Income Tax Deduction:||None|
North Dakota State Taxes 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 Taxes
Individual income taxes top out at 2.27%.
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 0.98%, or $1,906 on a $193,900 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 $42,000 or less for the calendar year. Assets may not exceed $500,000 over the past three years. Eligible seniors receive a property tax credit of 10% to 100%, up to a maximum of $5,625. 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 Estate and Inheritance 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.