What Changes in Your Paycheck in North Dakota
Your paycheck in North Dakota shows a North Dakota state income tax line item that grows progressively with income, starting at 0% for the first $1-$1. For a $1 salary, you might see ~ $1-$1 annually (~ $1-$1 per biweekly paycheck) for state tax, reflecting the large zero-percent bracket and very low rates (1.5%-2.5%) on taxable income. Most lower and middle-income earners pay very little or no state income tax. North Dakota paychecks only show state and federal tax deductions—no local income tax line items. The progressive brackets mean your state tax increases gradually as you move through brackets, but the rates remain very low (top 2.9%). Retirees see no state tax on retirement income distributions, and many retirees pay no state income tax at all due to the large zero-percent bracket.
Example State Tax in North Dakota
What you'll pay in North Dakota state income tax at different salary levels (single filer, no deductions):
| Gross Salary | State Tax (Year) | Effective Rate |
|---|---|---|
| $50,000 | $82 | 0.2% |
| $75,000 | $457 | 0.6% |
| $100,000 | $832 | 0.8% |
| $150,000 | $1,582 | 1.1% |
Use the calculator above to see your exact take-home pay with your filing status and deductions.
Is North Dakota Better for You?
North Dakota works well for:
North Dakota works best for lower and middle-income earners (under ~ $1 for singles, $1 for couples) who benefit from the large zero-percent bracket on the first $1-$1 and very low rates (1.5%-2.5%) on remaining income. At these income levels, effective state tax rates are 0%-1%, which is among the lowest in the nation. Retirees also benefit significantly from exemptions on Social Security and most retirement income, plus the large zero-percent bracket means many retirees pay no state income tax at all.
North Dakota may not be ideal if:
North Dakota is relatively favorable for most income levels due to its exceptionally low rates (0%-2.9%) and large zero-percent bracket. However, very high earners (~ $1+ for singles, $1+ for couples) reach the 2.5%-2.9% rates, though these rates are still among the lowest in the nation. Someone earning $1 pays an effective rate around 2%-2.5% (~ $1-$1 annually), while the same earner in other states might pay 5%-10%+ in income tax. Most earners would save money compared to almost all other states.
Common Mistakes People Make
Misconception: 'Progressive tax means I'll pay high rates in North Dakota.' Reality: North Dakota's progressive system starts with a 0% bracket for the first $1-$1 of income (depending on filing status), meaning most lower and middle-income earners pay no state income tax at all. Someone earning $1 pays an effective rate around 0.6%-1% (~ $1-$1 annually), while the same earner in a flat-tax state like Pennsylvania would pay $1 (3.07% flat, though PA may have local EIT). North Dakota's rates are among the lowest in the nation.
Misconception: 'North Dakota has low taxes because of the oil industry.' Reality: While North Dakota's economy benefits from oil and mineral extraction, the state's exceptionally low income tax rates (0%-2.9%) with a large zero-percent bracket make it tax-friendly regardless of industry. The state relies on oil/mineral extraction taxes (paid by companies), sales tax, and property taxes rather than income tax Most lower and middle-income earners pay no state income tax, and even high earners pay very low rates (top 2.9%) compared to other states.
Misconception: 'The zero-percent bracket only benefits very low earners.' Reality: North Dakota's zero-percent bracket covers the first $1 for singles or $1 for married filers—significantly larger than most states' low-income brackets. This means most middle-income earners pay no state income tax on a substantial portion of their income. A $1 earner pays 0% on the first $1, then very low rates (1.5%) on the remaining income, resulting in an effective rate around 0.3%-0.5%.
Key Facts That Affect Your Take-Home Pay
- North Dakota uses a progressive income tax system with four brackets, starting at 0% for the first $1 of income (single) or $1 (married) and escalating to a top rate of 2.9% for income above $1 (single) or $1 (married), making North Dakota's bracket structure unique with a very large zero-percent bracket and exceptionally low rates.
- North Dakota's progressive brackets are spread out with a very large zero-percent bracket covering the first $1-$1 of income (depending on filing status), meaning most lower and middle-income earners pay no state income tax at all. For a $1 earner, only ~ $1-$1 of income is taxed, and at very low rates (1.5%-2.5%), making the effective rate around 0.6%-1%, not the top 2.9% rate.
- North Dakota does not levy income taxes at the municipal level, ensuring uniform paycheck deductions across all locations. All North Dakota residents have the same income tax structure—only the state progressive brackets apply.
One Thing to Know
North Dakota has one of the largest zero-percent brackets in the nation ($1 for singles, $1 for married), meaning most middle-income earners pay little or no state income tax. This makes North Dakota one of the lowest-tax states for most earners, which surprises people who assume all states with income tax are expensive.
Important Notes
These calculations are estimates based on current tax law. Your actual take-home pay varies based on:
- Pre-tax deductions (401(k), health insurance, HSA, etc.)
- Your W-4 withholding elections
- Additional income or deductions at tax time
- Individual circumstances and tax situations
Tax rates are subject to change. Federal and state tax laws may be updated annually. This is not tax advice. For personalized help, consult a tax professional familiar with North Dakota tax laws.