Question 1

What is North Dakota's state income tax rate for 2025?

Accepted Answer

North Dakota imposes a 3-bracket progressive income tax under N.D.C.C. §57-38-30.3 with TY2025 single-filer rates of 0% (up to $48,475), 1.95% ($48,475–$244,825), and 2.50% (above $244,825). Married-filing-jointly thresholds are $81,050 and $298,075. This structure was enacted by HB 1158 (2023), which simplified the prior 5-bracket schedule and gave North Dakota one of the lowest state income tax burdens outside the nine no-income-tax states.

Question 2

What is North Dakota's standard deduction for 2025?

Accepted Answer

North Dakota conforms its standard deduction to the federal amount under N.D.C.C. §57-38-30.3(1)(a): $14,600 for single and MFS filers, $21,900 for HOH, and $29,200 for married-filing-jointly for TY2025. Because the state uses federal taxable income as its starting point, the federal standard deduction (or itemized deductions if elected) is applied before the state rate is computed.

Question 3

Does North Dakota tax Social Security and military retirement income?

Accepted Answer

North Dakota fully exempts Social Security benefits from state income tax under N.D.C.C. §57-38-30.3(2)(f), enacted by HB 1170 (2021) effective TY2021. North Dakota also fully exempts military retirement benefits under §57-38-30.3(2)(g), enacted by SB 2293 (2019) effective TY2019 — one of the earliest states to adopt a full military retirement exemption.

Question 4

Do North Dakota cities or counties charge a local income tax?

Accepted Answer

No. North Dakota does not authorize its municipalities or counties to levy a local income tax. All personal income tax in North Dakota is collected at the state level under N.D.C.C. Title 57, Chapter 38. Municipal revenue is derived primarily from local property tax and from local sales tax add-ons authorized under N.D.C.C. §11-09.1-05 and §40-05.1-06.

Question 5

What is North Dakota's long-term capital gains treatment for 2025?

Accepted Answer

North Dakota allows a 40% deduction of net long-term capital gain under N.D.C.C. §57-38-01.13 (subtraction from federal taxable income before the state rate is applied), one of only a small number of states offering preferential treatment for long-term gains. Combined with the 0% bottom bracket up to $48,475 single (TY2025), a taxpayer with primarily long-term capital gain income can have a very low effective North Dakota rate — the state's top effective rate on long-term gains is approximately 1.50%.

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