
Overview of North Dakota Taxes
North Dakota has a progressive income tax that is among the lowest in the country. In fact, the top marginal rate is the lowest of any state that has an income tax. The state sales tax ranks 33rd in the country and the average effective property tax rate is close to nationwide marks.
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Your Income Taxes Breakdown
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* These are the taxes owed for the 2020 - 2021 filing season.
Your 2020 Federal Income Tax Comparison
- Your marginal federal income tax rate
- Your effective federal income tax rate
- Your federal income taxes
Total Estimated 2020 Tax BurdenIncome Tax $ Sales Tax $ Fuel Tax $ Property Tax$ Total Estimated Tax Burden $ Percent of income to taxes = % | $ |
- About This Answer
Our income tax calculator calculates your federal, state and local taxes based on several key inputs: your household income, location, filing status and number of personal exemptions. Also, we separately calculate the federal income taxes you will owe in the 2019 - 2020 filing season based on the Trump Tax Plan.
How Income Taxes Are Calculated
- First, we calculate your adjusted gross income (AGI) by taking your total household income and reducing it by certain items such as contributions to your 401(k).
- Next, from AGI we subtract exemptions and deductions (either itemized or standard) to get your taxable income. Exemptions can be claimed for each taxpayer as well as dependents such as one’s spouse or children.
- Based on your filing status, your taxable income is then applied to the the tax brackets to calculate your federal income taxes owed for the year.
- Your location will determine whether you owe local and / or state taxes.
- Last Updated: January 1, 2020
When Do We Update? - We regularly check for any updates to the latest tax rates and regulations.
Customer Service - If you would like to leave any feedback, feel free to email info@smartasset.com.
- 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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Taxes in North Dakota

North Dakota State Tax Quick Facts
- Income tax: 1.1% - 2.9%
- Sales tax: 5% - 8.5%
- Property tax: 0.99% average effective rate
- Gas tax: 23.00 cents per gallon of regular gasoline and diesel
The booming economy in North Dakota in recent years has allowed the state to significantly cut taxes. The current income tax rates are the lowest in the country, ranging from 1.1% to 2.9%. The state’s sales taxes stand below the national average. When accounting for local rates, the average sales tax in the Roughrider State is 6.94%, 28th-lowest in the country.
The average effective property tax rate in North Dakota is also just 0.99%. That’s below the national average of 1.07%. Of course, the financial impact of that tax and others in North Dakota depends on individual taxpayer circumstances.
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 planning - including retirement, homeownership, insurance and more - to make sure you are preparing for the future.
Not a North Dakota taxpayer yet, but planning a move to the Peace Garden State? If you’re planning on using a mortgage to purchase a home, take a look at our comprehensive North Dakota mortgage guide to learn more about rates and the details of getting a mortgage in the state.
North Dakota Income Taxes
After several rounds of tax cuts in recent years, North Dakota has some of the lowest state income tax rates in the country. The top marginal rate now sits at 2.9%. Not everyone pays that rate, however. Lower earners pay lower rates, depending on their income tax bracket. The table below shows brackets for all filing statuses in North Dakota.
North Dakota taxable income is pretty similar to federal taxable income. A number of items that are taxed federally can be subtracted from taxable income in North Dakota. Interest from U.S. government obligations such as U.S. savings bonds is exempt, as is active duty pay from the National Guard or U.S. armed forces. You can also subtract contributions to a North Dakota College SAVE account, up to $5,000 for single filers and $10,000 for joint filers. In addition, some capital gains can be excluded.
Social Security benefits are subject to the state income tax in North Dakota. It is one of just a handful of states that tax Social Security benefits. Consider hiring a professional accountant or looking into tax preparation software to help file your returns.
North Dakota Capital Gains Tax
Capital gains are included as taxable income in North Dakota; however long-term gains may be eligible for the North Dakota net long-term gain exclusion. The exclusion is equal to 40% of your net long-term gains. To calculate the exclusion, take the smaller of net long-term gains and net long-term gains less net short-term losses (these can be found on IRS form 1040, Schedule D) and multiply it by 0.4.
North Dakota Sales Tax
Sales taxes are one of North Dakota’s most important sources of revenue. The statewide sales tax rate is 5%, but many counties and cities collect additional local option sales taxes, with rates as high as 3.5%. That means the highest rate possible in North Dakota is 8.5%. The table below shows state and local rates for every county in the state, as well as the major cities.
The total tax rates above apply to “tangible personal property” sold in the state. This includes most consumer products and household goods. Some services are also taxed, including deliveries of taxable items, communications services and construction or assembly of a taxable item.
Motor vehicles are subject to a separate excise tax of 5%, and are not subject to the local tax rates shown above. Food that is purchased for consumption at home is exempt, but prepared food is not.
Other exemptions from the North Dakota sales tax include: prescription drugs, medical devices, electricity, bibles, textbooks, newspapers, water and diabetic equipment. On the other hand, some products, like gasoline and tobacco, face special excise taxes, as described in the following sections.
North Dakota Gas Tax
Want to drive from Fargo to Williston? It’s a beautiful drive, but you’ll want to keep in mind state and federal gas taxes you have to pay along the way. North Dakota’s gas tax is 23 cents per gallon, which is the 21st-lowest rate in the U.S. The same rate applies to diesel gas.
North Dakota Cigarette Tax
North Dakota smokers pay some of the lowest cigarette taxes in the U.S. The state excise tax on a pack of cigarettes is 44 cents per pack, the fourth-lowest state rate. In addition to that excise tax, the general sales tax still applies. Sales tax is applied to the total cost of the cigarettes, which includes the excise tax.
North Dakota Alcohol Tax
North Dakota collects an excise tax on alcoholic beverages, with rates varying depending on the type of alcohol being sold. Beer is taxed at a rate of 16 cents per gallon. The state’s wine tax is 50 cents per gallon. The tax on liquor is $2.50 per gallon.
North Dakota Estate Tax
While North Dakota does have an estate tax statute, North Dakotans are currently not required to pay estate taxes. This is because of changes to the federal law, on which the North Dakota estate tax is based. North Dakotan gross estates that are greater than the federal exemption of $11.58 million (for 2020) must file a North Dakota estate tax return, but (barring any changes to the federal law) no taxes will be due.

- North Dakota is the No. 1 producer of honey in the U.S.
- Hall of Fame basketball coach Phil Jackson played high school basketball in Williston, North Dakota, leading the team to two state titles.
Places with the Lowest Tax Burden
Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.
Methodology
To find the places with the lowest tax burdens, SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country.
To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.
In order to determine sales tax burden, we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income after taxes. This balance is then multiplied by 35% to estimate the sales tax paid.For property taxes, we compared the median property taxes paid in each county.
For fuel taxes, we first distributed statewide vehicle miles traveled to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.
We then added the dollar amount for income, sales, property and fuel taxes to calculate a total tax burden. Finally, each county was ranked and indexed, on a scale of 0 to100. The county with the lowest tax burden received a score of 100 and the remaining counties in the study were scored based on how closely their tax burden compares.
Sources: US Census Bureau 2018 American Community Survey, Government Sources, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration, SmartAsset