North Dakota Tax and CPA Services: State, County and City Taxes

North Dakota looks simple on paper: a very low income tax, a 5% state sales tax and a deduction for Social Security. Three things set it apart: a first income tax bracket taxed at zero, oil taxes that matter in the western counties, and workers' compensation that only a state agency can provide. This page is general information for residents, nonresident workers, landowners and employers, for tax year 2025 and 2026.

Income tax: a zero bracket and a 2.5% top rate

The Office of State Tax Commissioner's 2025 tables apply 1.95% above $48,475 for single filers and 2.50% above $244,825. For married couples filing jointly the thresholds are $80,975 and $298,075; for heads of household, $64,950 and $271,450. Since 2023 the state has had three brackets, indexed each year for inflation.

Retirees benefit twice: the Social Security deduction applies to all individuals for 2021 and later, and 40% of long-term capital gains and qualified dividends is excluded. A new credit for employer-paid child care began with tax year 2025, equal to 50% of the first $1,000 contributed per employee, for licensed North Dakota facilities or those within ten miles of the state. Income tax returns use Form ND-1.

Nonresidents, reciprocity and treaty income

Nonresidents must file if they must file federally and receive North Dakota-source income, such as rent or royalties from land, gambling winnings, S corporation income, or services sold into the state. Minnesota and Montana residents who work in North Dakota are taxable only at home on those wages. If an employer withheld North Dakota tax anyway, a North Dakota return gets it back, and an employee can give the employer Form NDW-R to stop it.

The state also says foreign residents must file for wages earned in North Dakota even when a U.S. tax treaty exempts the income federally, which can matter for nonresident aliens on short assignments. See the US-India tax treaty and H-1B and visa holders. Our multi-state tax service coordinates home-state and North Dakota returns.

Business taxes, S corporations and partnerships

North Dakota's corporate income tax has three brackets: 1.41% up to $25,000, 3.55% to $50,000 and 4.31% above that, plus a 3.5% surtax for water's-edge filers. Rates have not changed since 2015. Corporations file Form 40.

S corporations (Form 60) and partnerships (Form 58) are taxed as they are federally, but must withhold on nonresident owners whose North Dakota share exceeds $1,000, unless the owner is in a composite filing. The state's pass-through guidance does not describe an entity-level SALT election, so check the current rule before relying on one. Business registration and annual filings go through the Secretary of State.

Sales tax, lodging taxes and oil and gas taxes

The state sales tax rate is currently 5% on most retail sales (7% for alcohol). Cities and counties may add their own sales taxes plus lodging, restaurant and motor vehicle rental taxes, so rates differ in Fargo, Bismarck, Grand Forks and the oil-country cities. Returns are filed monthly, quarterly or annually in ND TAP, the state's online portal. Remote sellers must collect once taxable sales into the state exceed $100,000 in the current or previous calendar year; see sales tax nexus.

Oil producers pay a 5% gross production tax and a 5% extraction tax, with a lower 2% extraction rate for qualified wells outside the Bakken and Three Forks formations. Monthly oil reports (Form T-12) are due on the 25th.

Payroll and workers' compensation

Employers register for withholding in ND TAP, use the federal W-4, and file quarterly returns (Form 306) if they withheld $1,000 or more the prior year. The annual reconciliation (Form 307) is met by e-filing W-2s and state-reportable 1099s by January 31, and a flat 1.5% may be used on bonuses.

North Dakota is one of the states with a monopoly fund. State law does not allow private insurers to write workers' compensation here, and WSI is the sole provider, including for out-of-state employers with significant North Dakota work. See our workers' compensation guide.

Unemployment insurance runs through Job Service North Dakota. The maximum taxable wage is set each year at 70% of the statewide average annual payroll, and rates are redetermined each year from your history. See state unemployment insurance. North Dakota-based employers must also withhold for residents working elsewhere unless that state requires its own withholding. The state's guidance covers only state income tax; for city or county levies elsewhere, see local payroll taxes.

Property tax

Counties determine and collect real property tax. Assessed value is 50% of market value, and revenue is split among the county, cities, townships and school districts. Tax is payable without penalty until March 1, with a 5% discount for paying in full by February 15. For 2024 and 2025 the state also pays a $500 primary residence credit.

How we can help North Dakota clients

We can prepare ND-1 returns for part-year and nonresident filers, help Minnesota and Montana commuters stop unneeded withholding, set up ND TAP accounts, and review S corporation withholding and royalty reporting. Illinois residents with North Dakota income can coordinate it with their Illinois return, and employers can use our payroll services.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.