Overview of North Dakota Taxes
North Dakota levies a progressive state income tax with five brackets based on income level. The state is notable for its low income tax rates, which range from 1.10% to 2.90%. No North Dakota cities charge local income taxes.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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North Dakota Paycheck Calculator
North Dakota Paycheck Quick Facts
- North Dakota income tax rate: 1.10% - 2.90%
- Median household income: $63,473 (U.S. Census Bureau)
- Number of cities that have local income taxes: 0
How Your North Dakota Paycheck Works
It can be tricky to figure out what your take-home pay will be, since it’s not as simple as dividing your annual income by the number of pay periods. Regardless of where you live, if you’re legally employed, you’re going to have taxes taken out of your paycheck before it hits your bank account.
Your North Dakota employer withholds federal income taxes and FICA taxes from all of your paychecks. When you start any new job, you will complete a W-4 form that details information about any dependents you have, your salary and your tax filing status. Federal income taxes are withheld based on the information included on your W-4.
The IRS released new guidelines for 2018 federal income tax withholdings because of changes in President Trump's tax plan. While there were no other alterations for 2019, the IRS made major revisions to the Form W-4 for 2020. This new iteration no longer asks you to list total allowances, as it now requires filers to enter annual dollar amounts for income tax credits, non-wage income, itemized and other deductions and total annual taxable wages. The form also uses a five-step process that lets you indicate any additional income or jobs and other personal information. You won't need to fill out the 2020 version unless you're adjusting your withholdings or changing jobs in 2020. However, all employees hired as of Jan. 1, 2020 are required to complete it.
The FICA taxes are Social Security and Medicare taxes. The government gets 12.4% of your income for Social Security taxes and 2.9% for Medicare taxes. You only pay 50% of that amount, while your employer pays the other half. Any income you have above $200,000 is also subject to a Medicare surtax of 0.9%. Your employer doesn’t match the surtax.
If you’re self-employed or an independent contractor, you’re responsible for covering the full amount of your FICA taxes on your own. This is a lot of money, so make sure to look for all the deductions or credits you can find during tax time. There is actually a deduction designed to help self-employed workers by deducting the “employer” half of the FICA taxes.
North Dakotans are in a favorable position as far as state income taxes are concerned. North Dakota levies one of the lowest progressive state income taxes in the country with rates ranging from 1.10% to 2.90%. This top rate is the lowest of the states that have an income tax.
North Dakota's state income tax system is comprised of five brackets. Single filers' taxable income up to $39,450 is taxed at just 1.10%. Singles making $39,451 to $95,500 are subject to a 2.04% rate, and $95,501 to $199,250 in taxable income is taxed at 2.27%. A rate of 2.64% applies to taxable income between $199,251 and $433,200. Finally, for singles earning more than $433,200, the highest rate of 2.90% applies. If you're married or the head of the household, the rates are the same, but the income levels are different.
A financial advisor in North Dakota can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
If you're planning a move to the Peace Garden State, you'll be relieved to know that no cities levy local income taxes. And if your move has you planning on purchasing a home, check out our North Dakota mortgage guide for information about rates and getting a mortgage.
How You Can Affect Your North Dakota Paycheck
While you can’t control all of the money that comes out of your paycheck, there are steps you can take to affect your take-home pay. The primary influence you can have on your paycheck involves how you choose to fill out your Form W-4. The information you include, such as your filing status, number of dependents and more, dictates how much an employer should withhold.
One step you can take to adjust the amount of taxes you pay is to add money to a tax-advantaged retirement account, such as a 401(k) or 403(b). These accounts take pre-tax money, which means they come out of your pay before income taxes do. The result is that you lower your taxable income. You can contribute pre-tax money into medical expense accounts like a health savings account (HSA) or flexible spending account (FSA). These accounts allow you to save money for things like copays and prescriptions.
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics
