North Dakota State Tax Guide: Tax Returns and Rules

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• February 24, 2025
• 6 min read

Navigating North Dakota’s 2025 State Tax Landscape: A Comprehensive Guide

Understanding the intricacies of North Dakota’s tax code and system is essential for residents and businesses striving to comply with state regulations and optimize their financial strategies; for official resources and updates, visiting the official website can be invaluable. This guide provides an in-depth look at the state’s tax structure for 2025, offering insights into income tax rates, filing deadlines, available deductions, and recent legislative developments in related legislation.

Key Insights into North Dakota’s Tax System

Income Tax Rates

North Dakota employs a progressive income tax system, which means that tax rates increase with higher income levels, impacting how residents calculate their North Dakota state tax liabilities. For 2025, the rates are structured as follows:

• 1.95% on the first $41,775 of taxable income
• 2.50% on income over $41,775

The state offers a standard deduction of $15,000 for single filers and $30,000 for married couples filing jointly, which depends on your filing status. For example, a single filer earning $50,000 would subtract the $15,000 standard deduction, resulting in a taxable income of $35,000, which falls into the 1.95% tax bracket.

Filing Your Tax Return

The deadline for filing your 2024 North Dakota individual income tax return is April 15, 2025. If you find yourself unable to meet this deadline, the state provides an automatic six-month extension if you have obtained a federal extension. This allows you to file your state return by October 15, 2025. However, it’s crucial to remember that this is an extension to file, not to pay. Any taxes owed must be paid by the original April deadline to avoid interest and penalties. For more information on tax extensions, visit the official North Dakota tax department website or FileLater’s North Dakota Tax Extension page.

Estimated Tax Payments

If you anticipate owing at least $1,000 in North Dakota state tax for 2025 after accounting for withholding and credits, you’re required to make estimated tax payments, and you can verify this information on the official website. These secure payments are due in four installments:

• April 15, 2025
• June 15, 2025
• September 15, 2025
• January 15, 2026

Timely and secure payments of your North Dakota state tax are essential to avoid penalties.

Sure! Besides individual income tax, North Dakota state tax includes several other types of taxes, alongside tax collections, that contribute to the overall tax burdens residents and businesses should be aware of. Here’s a breakdown of the key tax categories in the state:

Sales and Use Tax

In North Dakota, the state sales tax is set at 5%, but local jurisdictions, such as counties and cities, can impose additional sales taxes. This results in a total sales tax rate that can range from 5% to 8.5%, depending on the location.

Key Points:

• State Sales Tax: 5%
• Local Sales Tax: Up to 3.5% (varies by city/county)
• Common Exemptions: Groceries, prescription medications, and certain agricultural equipment
• Use Tax: If you purchase goods online or from out-of-state vendors without paying sales tax, you may owe North Dakota use tax.

👉 Example: Imagine purchasing a $1,000 appliance in Fargo, which has an additional 2.5% city tax. Your total sales tax would be $75 ($50 state + $25 local). This example illustrates how local taxes can impact your overall expenses, emphasizing the importance of understanding local tax rates.

Property Tax

Property taxes in North Dakota are assessed at the local level and are a vital source of funding for schools, local governments, and infrastructure projects. Unlike some states, North Dakota does not impose a state property tax, simplifying the tax code for property owners.

Key Points:

• Assessment: Based on the market value of your home or business property.
• Average Effective Property Tax Rate: .97%, which is lower than the national average of 1.07%.
• Property Tax Exemptions:
  • Homestead Credit for low-income senior citizens or disabled persons.
  • Disabled Veterans Property Tax Credit.
  • Farm residence exemptions for qualifying agricultural properties.

🔎 Recent Changes: North Dakota lawmakers are considering a plan to eliminate property taxes on primary residences using oil tax revenues. If passed, this could significantly reduce the tax burden for homeowners, offering a sense of financial relief and stability.

Corporate Income Tax

Businesses operating in North Dakota are also subject to the North Dakota state tax on corporate income based on net taxable income. The state employs progressive corporate tax rates, meaning higher earnings are taxed at higher rates.

2025 Corporate Tax Rates:

✅ Key Benefit: According to the state tax competitiveness index, North Dakota boasts one of the lowest corporate tax rates in the U.S., making it an attractive destination for businesses seeking a favorable tax environment, as highlighted on the state’s official website.

Oil and Gas Taxes

As one of the largest oil-producing states, North Dakota imposes specific taxes on oil and natural gas extraction, with more details available on the official website.

Types of Oil & Gas Taxes:

• Oil Extraction Tax: 5% of the gross value of oil.
• Gross Production Tax: 5% of the gross value of oil.
• Gas Tax: 4% on natural gas production.

📌 Did You Know? Oil tax revenues contribute to the state’s Legacy Fund, which supports public projects and state investments, underscoring the importance of natural resources to North Dakota’s economy.

Motor Fuel Tax

If you own a vehicle in North Dakota, you pay a state fuel tax whenever you fill up your tank.

Rates:

• Gasoline & Diesel: $.23 per gallon
• Aviation Fuel: $.08 per gallon

👀 Fun Fact: North Dakota has one of the lowest gas tax rates in the U.S., helping to keep fuel prices lower compared to other states, which can be a relief for frequent travelers and commuters.

Estate Tax

North Dakota does not impose an estate or inheritance tax. However, large estates may still be subject to federal estate taxes if they exceed the federal exemption limit, which is $13.61 million per individual in 2025.

Sin Taxes (Alcohol, Tobacco, and Cannabis)

Certain products like alcohol, tobacco, and cannabis are subject to special excise taxes:

• Alcohol Tax:
  • Beer: $.16 per gallon
  • Wine: $.50 per gallon
  • Spirits: $2.50 per gallon
• Cigarette Tax: $.44 per pack (lower than the national average of $1.91).
• Marijuana Tax: As of 2025, North Dakota allows medical marijuana only (no recreational sales yet). Medical cannabis sales are taxed at 5%.

Recent Legislative Developments

In late 2024, North Dakota voters considered Measure 4, a proposal to eliminate property taxes based on assessed value. Although this measure did not pass, Governor Kelly Armstrong has proposed a plan to abolish property taxes on primary residences by leveraging the state’s substantial oil tax revenues and the Legacy Fund. This initiative aims to provide significant tax relief to homeowners, though it remains under legislative consideration.

Frequently Asked Questions

Are Social Security Benefits Taxable in North Dakota?

No, North Dakota does not tax Social Security retirement benefits, providing a financial reprieve for retirees amid the broader North Dakota state tax landscape.

When preparing to file your taxes in North Dakota, you should also be aware of the state’s specific tax rates and regulations, which can be found on the official website, as they can significantly impact your financial planning. Understanding North Dakota state tax rules, especially if you are new to the state, is crucial for accurate tax filing. It is recommended to review state resources or consult a tax professional to ensure compliance with all state tax obligations.

How Can I Apply for a Tax Extension in North Dakota?

If you’ve secured a federal extension, North Dakota automatically grants a six-month extension to file your state return. If not, you can file Form 101 to request a state extension. Remember, this extends the filing deadline but not the payment deadline. For more details, visit the official website or the Personal Tax Extension page.

What Are the Sales Tax Rates in North Dakota?

The state sales tax rate is 5%, with local jurisdictions adding up to 3.5%, resulting in a total sales tax rate ranging from 5% to 8.5%, depending on the location.

Looking Ahead: The Future of Taxation in North Dakota

Staying informed about North Dakota’s tax regulations through a reliable website is not just about compliance; it’s about empowering yourself to make informed financial decisions. Whether you’re a resident planning for retirement or a business owner strategizing for growth, understanding these tax nuances can lead to significant savings and peace of mind. For personalized advice, consider consulting a tax professional or the North Dakota Office of State Tax Commissioner to secure your understanding of state tax obligations. Remember, knowledge is power, and in the realm of taxes, it can also be a source of financial freedom.