North Dakota Tax Calculator 2026

North Dakota Tax Overview

North Dakota Income Tax Brackets 2026

North Dakota has the distinction of having the lowest income tax rates among all states that levy an income tax. The graduated system now effectively starts at 0% for lower incomes, with a top rate of just 2.5% on taxable income exceeding approximately $225,975. Recent tax reform dramatically simplified the bracket structure and reduced rates, nearly eliminating income tax for many North Dakota residents entirely.

North Dakota uses federal taxable income as the starting point for its state income tax calculation, which means the federal standard deduction and itemized deductions carry through to the state return. This simplifies filing and means that many taxpayers with moderate incomes owe little or no state income tax. The state does not have any local income taxes, and the combination of federal conformity and ultra-low rates makes North Dakota's income tax nearly invisible for most residents.

How North Dakota Achieved the Lowest Rates

North Dakota's ability to maintain the nation's lowest income tax rates is directly linked to the Bakken Formation oil boom that began in the mid-2000s. Oil production and extraction taxes generate billions of dollars in revenue for the state, funding government operations and filling the North Dakota Legacy Fund (a sovereign wealth fund modeled after similar funds in oil-producing nations). The Legacy Fund held approximately $10 billion as of recent reports, providing a permanent revenue source that supplements ongoing oil tax collections.

North Dakota Sales Tax

North Dakota's state sales tax rate is 5%. Local jurisdictions can add their own sales taxes, with the maximum local rate being 3.5%. The average combined state and local rate across North Dakota is approximately 7.0%, though this varies significantly by location.

North Dakota exempts most groceries from the state-level sales tax, though local taxes may still apply to food purchases. Prescription medications are exempt. The state taxes most tangible personal property and some services. North Dakota also imposes special excise taxes on motor fuels, tobacco products, and alcoholic beverages.

Notable Local Rates

• Fargo — 7.5% combined (2.5% local)
• Bismarck — 7.5% combined (2.5% local)
• Grand Forks — 7.5% combined (2.5% local)
• Minot — 7.25% combined (2.25% local)
• Williston — 7.5% combined (2.5% local)

North Dakota Property Tax

North Dakota's effective property tax rate is approximately 0.94%, which is close to the national average. Property taxes are the primary revenue source for local governments, including counties, cities, school districts, and townships. The state limits the total mill levy that can be imposed without voter approval, which helps keep rates in check.

North Dakota provides several property tax relief programs. The Homestead Credit assists low-income elderly and disabled homeowners with incomes below $42,000. The state has also used oil tax revenue to provide property tax relief, distributing hundreds of millions of dollars to political subdivisions to help reduce property tax levies. This oil-funded property tax relief is a unique benefit that residents of most other states do not enjoy.

North Dakota Oil and Energy Economy

North Dakota is the second-largest oil-producing state in the US (behind Texas), thanks to the Bakken and Three Forks shale formations in the western part of the state. The oil extraction tax (currently 5%) and gross production tax (5%) together generate enormous revenue for the state. A significant portion of this revenue flows into the Legacy Fund, which was established by a constitutional amendment in 2010. The fund's earnings can be spent by the Legislature, while the principal can only be accessed with a two-thirds vote of both chambers. This structure provides long-term fiscal stability and has enabled North Dakota to reduce personal income tax rates to near-zero levels while still maintaining healthy state finances.

North Dakota vs. Neighboring States

North Dakota's ultra-low income tax rates make it highly competitive with its neighbors:

• South Dakota — No income tax, 6.4% avg sales tax, 1.14% property tax. SD has no income tax at all, but ND's rates are so low the difference is minimal for most people. SD has higher property taxes.
• Montana — 1%-6.75% income tax, no sales tax, 0.74% property tax. Montana has much higher income tax rates but no sales tax. ND is better for high earners; MT may be better for high spenders.
• Minnesota — 5.35%-9.85% income tax, 7.49% avg sales tax, 1.02% property tax. Minnesota has dramatically higher income tax rates. Moving from MN to ND saves high earners significantly.
• Wyoming — No income tax, 5.36% avg sales tax, 0.56% property tax. Wyoming has no income tax and lower property taxes but a less diversified economy.

Use our state comparison calculator to see exactly how much you could save.