Taxes In North Dakota

FT Contributor
A road sign that reads "North Dakota."
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North Dakota tax rates are some of the lowest in the country. If you live in North Dakota, it’s important to understand the income and property taxes you may owe each year. In addition to these taxes, you’re also required to pay a sales tax on purchases you make in the state. Review this guide to find out more about North Dakota tax regulations, including when you need to file your tax return and how the government uses your tax dollars.

North Dakota Income Tax

When you earn income, you’re responsible for filing a federal income tax return to ensure you paid the proper taxes to the federal government on what you earned. If you’re a North Dakota resident, you’re also responsible for filing a state income tax return so you can ensure you paid enough taxes to the state government as well.

Due to a growing economy, North Dakota has been able to cut income tax rates in recent years. The tax rate you’re required to pay depends on the income you earn and how you file your taxes.

If you’re a single filer, the following tax rates apply to you:

Taxable Income Earned Tax Rate
$0 to $39,450 1.1%
$39,450 to $95,450 2.04%
$95,450 to $199,250 2.27%
$199,250 to $433,200 2.64%
Over $433,200 2.9%

If you’re married but filing taxes separately from your spouse, you’re responsible for paying the following tax rates:

Taxable Income Earned Tax Rate
$0 to $32,950 1.1%
$2,950 to $79,600 2.04%
$79,600 to $121,275 2.27%
$121,275 to $216,600 2.64%
Over $216,600 2.9%

If you’re filing your taxes as the head of household, the following tax rates apply to your taxable income:

Taxable Income Earned Tax Rate
$0 to $52,850 1.1%
$52,850 to $136,450 2.04%
$136,450 to $220,900 2.27%
$220,900 to $433,200 2.64%
Over $433,200 2.9%

If you’re married and filing taxes jointly with your spouse, the following tax rates apply:

Taxable Income Earned Tax Rate
$0 to $65,900 1.1%
$65,900 to $159,200 2.04%
$159,200 to $242,550 2.27%
$242,550 to $433,200 2.64%
Over $433,200 2.9%

Social Security benefits you were awarded throughout the year are considered taxable income. However, interest from U.S. savings bonds or other U.S. government obligations are exempt, as are certain long-term capital gains.

Contributions you made to a North Dakota College SAVE account throughout the year may also be exempt from taxable income. As a single filer, you can subtract up to $5,000 in contributions and up to $10,000 if you file your taxes jointly.

North Dakota Sales Tax

When you purchase tangible property or certain services in North Dakota, you’re charged a sales tax on the transaction. The statewide sales tax is 5%. Some of the items and services subject to this sales tax include:

  • Periodicals and magazines;
  • Cigarettes and tobacco;
  • Leasing of a hotel, motel, or rental room for less than 30 consecutive days;
  • Personal property rentals;
  • Admission fees for recreational events.

In addition to the 5% sales tax, you may be responsible for a local tax, depending on where you are when you make a purchase. Municipalities and counties have the right to add their own local taxes to the statewide tax rate. For example, the city of Larimore has a 2% city tax, making the sales tax rate of 7% in the city.

Alcoholic beverages are subject to a 7% statewide sales tax, whether they’re sold at a bar, restaurant, liquor store, or convenience store. New mobile homes, farm machinery or equipment, and irrigation equipment that will be used in the agricultural sector are only subject to a 3% statewide sales tax rate.

North Dakota Property Tax

If you’re a property owner, you’re subject to paying property taxes, no matter what state you live in. These property taxes are used by the county to fund improvements on roads, schools, and other public services.

In North Dakota, your tax rate is determined by the value of your property and the mill rate in your county. A mill rate is 0.001% of the taxable value of your property. The average mill rate in North Dakota in 2014 was 239.12.

A county assessor reviews your property’s characteristics and the current market to determine its value. Once your property value is assessed and a county mill rate is finalized for the year, your property taxes are calculated and the county sends you a tax bill. When you pay the county, it distributes these funds to the following taxing entities:

  • School district;
  • County;
  • City;
  • Township;
  • Park district;
  • Water district;
  • Library board;
  • Rural fire/ambulance;
  • UND Medical School.

In North Dakota, the average tax rate for an owner-occupied residential property was 0.9% and the average household paid $1,296 in property taxes. Your property tax bill can increase and decrease annually as the mill rate in your county and your property value fluctuate.

North Dakota Estate Tax

North Dakota’s estate tax mimics the estate tax regulations imposed by the federal government. The only time it’s necessary to file an estate tax return with the state is if a United States Estate (and Generation-Skipping Transfer) Tax Return (Form 706) must be filed with the federal government.

An estate’s executor only has to file this form if the combined gross assets and prior taxable gifts of the estate equal or exceed $11,580,000 in 2020. If a federal estate tax return is required, a State of North Dakota Estate Tax Return (Form 54-91) must be filed with the state.

Filing Taxes in North Dakota      

If you earned an income or own property in North Dakota, you owe taxes to the state. Your property tax bill is sent to you by mail from your local county government. However, you’re responsible for filing your state income tax return by April 15 each year along with your federal return.

If you’re eligible, you can use the North Dakota e-filing system to electronically file your return. If you’re not eligible to file online, you can use the online fillable forms to complete your taxes. You also have the option of printing the forms and submitting them to the North Dakota Office of State Tax Commissioner.

As a North Dakota resident, you may be responsible for paying income and property taxes. It’s important to understand how your taxes are calculated and when you need to pay them so you can avoid legal consequences or penalty fees.

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