North Dakota takes less income tax than any other state that has one. Not slightly less — $377 on an $85,000 salary, against $1,621 in Ohio, the next-lowest, and $6,864 in Oregon.
The reason is the zero bracket. North Dakota charges nothing on the first $49,575 of taxable income, and because the return starts from federal taxable income, that sits on top of the $16,100 federal standard deduction. A single filer earning under $65,675 owes North Dakota nothing at all.
Take-home on $85,000 is $68,251 — $377 below what the nine no-income-tax states leave you.
A note before you start. This is general education, not tax advice. Federal figures are tax year 2026, from IRS Revenue Procedure 2025-32 and the Social Security Administration; North Dakota's brackets, tax base, capital gains subtraction and retirement rules come from this site's own sourced 50-state dataset, citing the Office of State Tax Commissioner's 2026 Form ND-1ES rate schedules and Form ND-1 instructions. Every dollar figure is computed by the same engine the site's calculators use, on a single filer taking the federal standard deduction with no dependents or pre-tax deferrals unless stated. Sales tax and property tax are discussed qualitatively.
1. What North Dakota takes
| Amount on $85,000 | |
|---|---|
| Gross salary | $85,000 |
| Federal income tax | −$9,870 |
| Social Security (6.2%) | −$5,270 |
| Medicare (1.45%) | −$1,233 |
| North Dakota income tax | −$377 |
| Take-home | $68,251 |
Across incomes, single filer:
| Salary | North Dakota tax | Effective ND rate | Take-home |
|---|---|---|---|
| $30,000 | $0 | 0% | $25,285 |
| $45,000 | $0 | 0% | $38,338 |
| $60,000 | $0 | 0% | $50,390 |
| $85,000 | $377 | 0.44% | $68,251 |
| $120,000 | $1,059 | 0.88% | $92,191 |
| $175,000 | $2,132 | 1.22% | $128,747 |
Three of those rows are zero. A North Dakotan earning $60,000 pays exactly what a Texan or a Floridian pays in state income tax: nothing.
And at $175,000 the effective rate is 1.22% — lower than the lowest bracket in twenty-odd states.
Run your own salary against North Dakota's brackets2. The zero bracket is the whole story
| Taxable income above (single) | Rate |
|---|---|
| $0 | 0% |
| $49,575 | 1.95% |
| $250,400 | 2.50% |
| Filing status | Zero bracket ends | Plus federal deduction | No tax below |
|---|---|---|---|
| Single | $49,575 | $16,100 | $65,675 |
| Married filing jointly | $82,800 | $32,200 | $115,000 |
| Head of household | $66,400 | $24,150 | $90,550 |
| Married filing separately | $41,400 | $16,100 | $57,500 |
Read the married-joint row again. A North Dakota couple with a combined salary of $115,000 owes the state nothing.
The 2.5% top rate begins at $250,400 of taxable income for a single filer, which is $266,500 of salary. Almost nobody in North Dakota pays 2.5%, and even those who do pay it only on the excess.
Why the base matters here
North Dakota's return begins from federal taxable income. Form ND-1 line 1b reads "Federal taxable income from Form 1040 or 1040-SR, line 15" — the figure that already has the federal standard or itemised deduction subtracted from it.
That is why North Dakota records no standard deduction of its own, and why the thresholds above are so high: they are defined on post-deduction income, and adding a state deduction would double-count.
It also means the state's zero-tax threshold rises automatically with federal law. When Congress raises the standard deduction, North Dakota's no-tax floor rises with it, without a vote in Bismarck.
3. Filing jointly
| Salary | Single ND tax | Joint ND tax | Difference |
|---|---|---|---|
| $30,000 | $0 | $0 | $0 |
| $45,000 | $0 | $0 | $0 |
| $60,000 | $0 | $0 | $0 |
| $85,000 | $377 | $0 | $377 |
| $120,000 | $1,059 | $98 | $961 |
| $175,000 | $2,132 | $1,170 | $962 |
At $85,000 a married couple owes nothing and a single filer owes $377, which is the entire difference.
At $120,000 the couple owes $98. That is not a typo, and it is the sort of figure that makes North Dakota's income tax genuinely difficult to compare against other states — the amounts are small enough that ordinary rounding decisions matter.
The joint benefit reaches $962 and stops growing, because both filers are inside the 1.95% band and the couple's threshold advantage is fixed at $49,325 of taxable income.
4. What the paycheck actually looks like
On $85,000 as a single filer:
| Pay schedule | Gross per cheque | Net per cheque |
|---|---|---|
| Weekly (52) | $1,634.62 | $1,312.51 |
| Biweekly (26) | $3,269.23 | $2,625.03 |
| Semi-monthly (24) | $3,541.67 | $2,843.78 |
| Monthly (12) | $7,083.33 | $5,687.56 |
Biweekly and semi-monthly are not the same thing. Biweekly is 26 cheques — every other Friday — so two months a year carry three paydays. Semi-monthly is 24, on fixed dates, so every month carries exactly two. The annual total is identical; the monthly cash flow is not, and a biweekly earner budgeting on "two cheques a month" is under-counting by $5,250 a year.
North Dakota withholding is worth a specific look, because the zero bracket is so wide. An employee earning under $65,675 should owe nothing — and if state tax is being withheld from their pay, they are lending North Dakota money interest-free until they file.
Form ND-1 is where you get it back, and someone below the threshold who does not file does not get it. That is the single most common way North Dakotans overpay, and it is entirely avoidable.
Withholding is an estimate, not the tax. Over-withholding produces a refund; under-withholding a bill.
5. The 40% capital gains subtraction
North Dakota allows a subtraction of 40 percent of net long-term capital gain, claimed on Form ND-1 line 6 via a worksheet whose final step reads "Multiply line 7 by 40% (.40)."
That was checked rather than assumed, because several states have quietly repealed comparable breaks. It is still in force for 2026.
At the 1.95% rate, the effective North Dakota rate on a long-term gain is 1.17%. At the 2.5% top rate it is 1.5%.
| Realised long-term gain | At 1.95% on the whole gain | With the 40% subtraction |
|---|---|---|
| $100,000 | $1,950 | $1,170 |
| $500,000 | $9,750 | $5,850 |
Four conditions attach, and they are worth knowing:
The gain must be long-term. A capital gain distribution from a mutual fund counts; a short-term gain does not.
A part-year or nonresident may exclude only gain reportable to North Dakota.
Gain already excluded under another subtraction cannot be excluded a second time.
The worksheet starts from federal Schedule D line 15 — so if that line is zero or less, no exclusion is allowed at all. A year with a net capital loss position gets nothing, even on individual gains within it.
6. No local income tax
No North Dakota county, city or school district levies a tax on personal income. Form ND-1 has no local income tax line and no locality-of-residence field.
Worth stating explicitly because of who is next door. Minnesota is the most expensive income tax state in the region and bars local income taxes by statute; South Dakota has none at all. A North Dakota take-home figure is complete as stated.
North Dakota local government is funded by property tax, and by a share of the state's oil and gas revenue in the producing counties.
7. What pays for it: oil
North Dakota's income tax is low for a specific and datable reason. Bakken shale production transformed the state's revenue base, and oil and gas taxes — the gross production tax and the oil extraction tax — now fund a very large share of state government.
The state's Legacy Fund captures a percentage of that revenue in a permanent trust, and its earnings supplement the general fund.
Two consequences worth understanding:
The income tax cuts are downstream of oil. North Dakota's rate schedule has been reduced substantially over the past decade, and the zero bracket in section 2 is a recent creation. It exists because oil revenue made it affordable, not because of a longstanding constitutional commitment like Nevada's or Wyoming's.
Which means it depends on commodity prices. A sustained fall in production or price puts pressure on a structure built on it. North Dakota has run large surpluses and has a substantial Legacy Fund, so the position is stronger than Alaska's — but it is the same category of arrangement.
Sales tax sits below the national middle at the state level, with a local option layer. Groceries are exempt.
Property tax is the larger local bill, and North Dakota operates a homestead credit for qualifying older and disabled homeowners plus a primary residence credit available more broadly. Both are applied for.
8. Retirement: generous on Social Security, ordinary on everything else
Social Security is fully exempt, with no income threshold, no age condition and no phase-out. Form ND-1 line 15 subtracts the taxable portion of Social Security benefits reported on federal Form 1040 line 6b.
Military retirement is exempt in full. Form ND-1 line 14 excludes taxable military retirement benefits.
Private pensions are fully taxable. Public pensions are fully taxable too — state and local government pensions alike. The asymmetry here is sharp and deliberate, and it runs the unusual way: North Dakota gives no break to its own retired public employees beyond what a private-sector retiree gets.
401(k), 403(b), 457 and traditional IRA distributions are fully taxable, embedded in the federal taxable income the return starts from.
| Source | North Dakota treatment |
|---|---|
| Social Security | Exempt in full |
| Military retirement | Exempt in full |
| Public pension (state, local) | Fully taxed |
| Private pension | Fully taxed |
| 401(k), 403(b), 457, traditional IRA | Fully taxed |
| Retirement income, single | North Dakota tax |
|---|---|
| $40,000 all Social Security | $0 |
| $40,000 all 401(k) withdrawals | $0 |
| $70,000 — $30,000 SS + $40,000 401(k) | $0 |
Look at the middle row. A retiree drawing $40,000 entirely from a 401(k) pays North Dakota nothing — not because of a retirement exclusion, but because $40,000 is below the $65,675 no-tax threshold. The zero bracket does what a retirement exclusion would do elsewhere, and it does it for everyone rather than only for retirees.
That is why North Dakota's "no retirement exclusion" looks worse on paper than it is in practice. A state with a 1.95% rate and a $65,675 floor does not need one.
9. What the zero bracket means for a low earner
Most of this article is about how little North Dakota takes. This section is about a group for whom it takes nothing at all, and who are the most likely to hand it money anyway.
A single North Dakotan earning $45,000 owes the state $0. So does one earning $60,000. So does a married couple on $110,000.
But state tax may still be withheld from their pay, because withholding tables are built to approximate liability across a range of circumstances and they do not know your filing status is going to land you under the threshold.
Three practical consequences:
You have to file to get it back. North Dakota does not refund over-withheld tax to someone who never files a return. Every dollar withheld from someone below the threshold who does not file is a dollar the state keeps.
The people most likely to be affected are the least likely to file. Someone earning $35,000 with a simple W-2 and no other income has the least obvious reason to file a state return — and, in North Dakota, potentially the most to gain from it.
Check your pay stub for a state withholding line. If there is one and your salary is under $65,675 single or $115,000 filing jointly, you are lending North Dakota money at zero interest and you can stop by updating your withholding.
This is a genuinely North Dakota-specific point. In a state with a $2,000 standard deduction and a 5% rate, almost every worker owes something, so over-withholding is a rounding question. Here the zero bracket runs past a full-time median salary, which puts a large share of the workforce in a position where the correct amount of state withholding is nothing at all.
10. Where North Dakota ranks
At $85,000, North Dakota's $377 is the lowest of the 41 income-tax states, by a wide margin.
| State | Tax on $85,000 | Take-home |
|---|---|---|
| The nine no-income-tax states | $0 | $68,628 |
| North Dakota | $377 | $68,251 |
| Ohio | $1,621 | $67,006 |
| Arizona | $1,731 | $66,896 |
| Louisiana | $2,164 | $66,464 |
North Dakota is $1,244 cheaper than the next-cheapest income-tax state and only $377 more expensive than having no income tax at all.
Against its neighbours:
| Salary | ND | MN | MT | SD |
|---|---|---|---|---|
| $30,000 | $0 | $786 | $653 | $0 |
| $45,000 | $0 | $1,589 | $1,358 | $0 |
| $85,000 | $377 | $4,257 | $3,442 | $0 |
| $175,000 | $2,132 | $10,904 | $8,527 | $0 |
Minnesota takes eleven times as much at $85,000 and five times as much at $175,000. For anyone in the Fargo–Moorhead metro, which straddles the Red River, that is a $3,880 annual difference at $85,000 on the state figure alone.
South Dakota takes nothing, so the comparison there is $377 a year — small enough that almost any other factor outweighs it.
11. What you can control
Pre-tax deferrals save 1.95% at state level for an $85,000 earner, and nothing at all below $65,675 — because you are already at zero. A $10,000 traditional 401(k) contribution saves $2,200 federally plus $195 in North Dakota tax.
That $195 is the smallest state-level deferral saving of any state with an income tax, and it means the deferral decision in North Dakota is federal in a way it is not elsewhere.
And the reverse is a real strategy. Someone who deferred income in Minnesota at 6.8% and retires across the river in North Dakota withdraws it at 1.95% or, more likely, at zero. That is one of the larger state-tax arbitrages available anywhere in the country, and the two states are twenty minutes apart.
HSA contributions through payroll cut federal tax, North Dakota tax and FICA. On $4,400 that is roughly $968 federal, $86 North Dakota and $337 FICA — about $1,391, or 32% of the amount contributed.
Holding for long-term treatment is worth 40% of the gain — see section 5 — though at a 1.95% rate the absolute amounts are small unless the gain is large.
And file even if you owe nothing. Section 4 explains why.
Frequently asked questions
What is North Dakota's income tax rate? Three brackets: 0% on the first $49,575 of taxable income, 1.95% above that, and 2.5% above $250,400, for a single filer.
What is take-home pay on $85,000 in North Dakota? $68,251 for a single filer, after $9,870 federal income tax, $6,503 FICA and $377 North Dakota income tax — the lowest state income tax bill in the country outside the nine states with none.
At what income does North Dakota start taxing me? $65,675 of salary for a single filer, $115,000 for a married couple filing jointly, $90,550 for head of household. Below those figures the state takes nothing.
Does North Dakota have a standard deduction? Not one of its own. The return starts from federal taxable income, so the federal standard deduction — $16,100 single for 2026 — is already subtracted before the brackets apply.
Does North Dakota tax capital gains? At a discount: 40% of net long-term capital gain is subtracted, making the effective rate 1.17% at the 1.95% bracket. Four conditions apply, including that federal Schedule D line 15 must be positive.
Does North Dakota tax retirement income? Social Security and military retirement are exempt. Private and public pensions and 401(k), 403(b) and IRA distributions are all taxable — but the $65,675 zero-tax threshold means a retiree drawing $40,000 pays nothing anyway.
Can a North Dakota county or city tax my income? No. Form ND-1 has no local income tax line and no locality field.
How does North Dakota compare with Minnesota? Minnesota takes $4,257 at $85,000 against North Dakota's $377 — eleven times as much. For the Fargo–Moorhead metro that is a $3,880 annual difference on the state figure alone.
What to do next
North Dakota's income tax is the lowest in the country outside the states with none, and its zero bracket means most ordinary earners pay nothing at all. The main thing worth doing is checking you are not over-withheld.
- North Dakota take-home pay calculator — your salary with every deduction shown separately.
- Your Paycheck in the USA in 2026 — all fifty states on one salary.
- Take-Home Pay in Minnesota — the neighbour that takes eleven times as much.
- Take-Home Pay in South Dakota — no income tax at all, $377 a year cheaper.
- 50/30/20 budget calculator — built on take-home rather than salary.
Every figure on this site is sourced and dated. How we source every number.
Figures in this article are illustrations computed by this site's own tax engine for tax year 2026, on a single filer taking the federal standard deduction with no dependents or pre-tax deferrals unless stated. Federal figures come from IRS Revenue Procedure 2025-32 and the Social Security Administration; North Dakota's brackets, tax base, capital gains subtraction and retirement rules from this site's sourced 50-state dataset, citing the North Dakota Office of State Tax Commissioner and its 2026 Form ND-1ES rate schedules and Form ND-1 instructions. Oil and gas revenue, sales tax and property tax are discussed qualitatively rather than computed. This is general education and not tax advice; consult a licensed tax professional for your own situation.