North Dakota has a progressive income tax system with 3 brackets: 0% on the first $48,475, 1.95% up to $244,825, and 2.5% above that — the LOWEST income tax burden among all states with income tax. The 0% bottom bracket means a single filer earning $50,000 pays $0 in state income tax. At $100K income, the total state tax is just $691 (0.7% effective rate). The Peace Garden State's ultra-low rates are funded by massive oil wealth: the Bakken shale boom generates $3.2B annually in oil extraction/severance taxes, supporting an $11.7B budget surplus (largest per-capita surplus nationally).
HB 1158 (2023) — The 0% bracket law: North Dakota's Legislature passed House Bill 1158 in 2023, which restructured the state's income tax brackets effective January 2024. The bill created a new 0% bracket on the first $48,475 of income (single filers) and reduced the top rate from 2.9% to 2.5%. This transformed ND's tax from a near-flat 1.95-2.9% system to one with a meaningful tax-free zone. Oil/gas revenue ($3.2B, 52% of state budget 2026) funds $6.2B total budget: $2.4B K-12 education, $1.6B higher education (free tuition programs), $950M infrastructure. The $11.7B Legacy Fund (oil savings, similar to Alaska Permanent Fund) provides long-term stability.
How it compares:
Legislature debating further cuts: Governor Burgum proposed phasing to 0% income tax by 2028 (like SD/WY neighbors), but oil revenue volatility (fell 60% 2014-2016, recovered 2021-2024) makes full elimination risky. Current 0-2.5% structure remains through 2026.
Source: North Dakota Office of State Tax Commissioner - Individual Income Tax
Note: These are marginal rates — you only pay the higher rate on income within each bracket.
Here's what North Dakota residents actually pay at different income levels (2026, single filer, standard deduction):
| Annual Income | Federal Tax | State Tax | Total Tax | Take-Home Pay | Effective Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $0 | $3,820 | $46,180 | 7.6% |
| $75,000 | $7,670 | $203 | $7,873 | $67,127 | 10.5% |
| $100,000 | $13,170 | $691 | $13,861 | $86,139 | 13.9% |
| $150,000 | $24,734 | $1,666 | $26,400 | $123,600 | 17.6% |
| $250,000 | $51,304 | $3,616 | $54,920 | $195,080 | 22.0% |
Note: Includes federal and state income tax only. Does not include FICA (Social Security/Medicare), which adds 7.65% for employees.
Key takeaway: At $100K, North Dakota takes $691 in state tax alone.
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Migration Trends: According to U.S. Census Bureau data (2021-2022), North Dakota experienced net outmigration of 1,890 residents (-0.2% population, slight decline post-oil boom). Top destination states were:
Why people move to North Dakota:
Why people leave North Dakota:
Tax considerations if moving here:
| State | Tax Rate | Tax on $100K Income | Difference from North Dakota |
|---|---|---|---|
| North Dakota | 0-2.5% | $691 | Baseline |
| South Dakota | 0% | $0 | -$691 (save) |
| Montana | 5.9% flat | $5,900 | +$5,209 (higher) |
| Minnesota | 5.35-9.85% | $7,140 | +$6,449 (higher) |
| Wyoming | 0% | $0 | -$691 (save) |
Key insight: North Dakota's 0% bottom bracket makes it the LOWEST income tax burden among income tax states. At $100K income, ND ($691 state tax) saves $5,209/year vs Montana ($5,900), $6,449/year vs Minnesota ($7,140), $5,071/year vs California ($5,762). Only South Dakota (0%) and Wyoming (0%) beat ND on income tax alone, saving $691/year. But total burden matters:
Total tax burden at $100K income + $40K annual spending + $310K home:
Result: North Dakota's 6.7% total burden is very competitive — beats Montana (8.9%) and Minnesota (13.3%), only slightly behind South Dakota (5.3%) and Wyoming (3.6%). ND's 0% bottom bracket means income tax is almost irrelevant at moderate incomes; the difference vs South Dakota is now just $691/year. ND offers excellent balance: near-zero income tax + moderate sales/property tax + oil-funded services (free tuition programs, infrastructure) + $11.7B surplus for stability.
North Dakota's income tax has 3 progressive brackets for 2026: 0% on the first $48,475 of income, 1.95% from $48,475 to $244,825, and 2.5% above $244,825 — the LOWEST income tax burden among all states with income tax. The 0% bottom bracket (created by HB 1158, 2023) means single filers earning up to $48,475 (after standard deduction) pay $0 in state income tax. At $100K income, you pay just $691 state tax (0.7% effective rate) — lower than every other income tax state. North Dakota restructured its brackets in 2023 via HB 1158, creating the 0% zone and reducing the top rate from 2.9% to 2.5%, funded by Bakken oil boom revenue.
North Dakota's Bakken shale oil boom (discovered 2008, peak 1.5M barrels/day 2019, current 1.2M barrels/day 2026) generates $3.2B annually in oil extraction/severance taxes (52% of $6.2B state budget), allowing ultra-low 2.5% income tax ($1.5B, 24% of budget) without cutting services. Additional revenue: sales tax ($1.2B, 19%), Legacy Fund earnings ($350M from $11.7B oil savings fund, similar to Alaska PFD). This funds: $2.4B K-12 education (highest per-student spending $15,800 nationally), $1.6B higher education (free tuition programs for residents), $950M infrastructure. ND legislature cut income tax 2023 (2.9% to 2.5%) due to oil surplus, debates further cuts to 0% (like SD/WY) but oil volatility (fell 60% 2014-2016) makes elimination risky.
North Dakota lost 1,890 residents net (2021-2022, -0.2%) and stagnant population (+5.7% 2010-2020, then declining 2020-2026) due to: oil boom/bust cycles (2008-2014 boom added 100K jobs, 2014-2016 bust lost 15K jobs, volatility scares long-term residents), harsh winters (Fargo -15°F January, Bismarck -10°F, 6+ months cold), isolation (Fargo 130K largest city, limited urban amenities vs Minneapolis 3.7M 4hrs away), brain drain (UND/NDSU grads leave for Minneapolis/Denver/Chicago higher pay + culture). Young workers move OUT to MN/MT/TX for lifestyle despite higher taxes (MN 9.85% vs ND effective 0.7% at $100K = $6,449 more tax at $100K in MN, but worth it for Minneapolis amenities for many). ND attracts: oil workers (temp 2-week rotations, don't stay), retirees (ultra-low tax + safe + affordable), remote workers (keep coastal salaries, enjoy $310K Fargo housing). But can't retain young families (limited culture/diversity).
North Dakota FULLY EXEMPTS Social Security at all income levels (no AGI threshold - all SS tax-free regardless of earnings). Military retirement pay FULLY EXEMPT (one of 14 states exempting military pensions completely). Pensions, 401k, IRA TAXED at 0-1.95% rates (ultra-low — 0% on first $48,475 of pension income). Example: At $80K retirement ($25K SS + $55K pension), age 65: ND taxes $0 SS (exempt) + $55K pension. Pension taxable = $55K - standard deduction; if taxable portion is $38,900, that falls entirely in the 0% bracket = $0 state tax. Compare: MN $4,620 tax (5.78% effective, SS partially taxed), CA $3,168 (3.96%, SS partially taxed), FL $0 (no income tax). ND is excellent for retirees — near-zero pension tax + $0 SS tax + safe (2nd-lowest crime) + affordable ($310K Fargo housing) + free tuition for grandkids (ND higher ed programs).
North Dakota's Legacy Fund is an $11.7B sovereign wealth fund (similar to Alaska Permanent Fund, Norway oil fund) established 2011 to save 30% of state oil extraction tax revenue for future generations. Fund grew: $3.7B (2015) to $11.7B (2026) = +216% growth from oil boom + investment returns (7.8% annualized). Currently distributes $350M annually to state budget (5% of fund value, similar to Alaska PFD formula). Legislature debates: (1) Increase distributions to eliminate 2.5% income tax (would cost $1.5B annually, requiring $450M from Legacy Fund), OR (2) Keep Legacy Fund growing to $30B+ by 2040 for post-oil economy. Governor Burgum proposed phasing to 0% income tax by 2028 using Legacy Fund, but Legislature rejected (worried about oil volatility - Bakken production down 20% 2019-2021 COVID crash). Likely outcome: ND maintains 2.5% rate through 2030s, cuts to 0% only if oil prices sustain $100/barrel 5+ years (currently $80).
YES, IF you prioritize ultra-low taxes + affordability + safety over urban culture and warm climate. At $120K remote salary: ND $1,014 state income tax (0.85% effective — 0% on first $48,475, 1.95% on remainder) + $3,627 property (0.98% × $370K Fargo home) + $3,600 sales (7.5% × $48K spending) = $8,241 total (6.9% burden). Compare Austin TX: $0 income + $7,400 property (1.8% × $410K) + $4,800 sales (10% × $48K) = $12,200 total (10.2%). ND saves $3,959/year + $40K cheaper housing = $43,959 total savings first year. Over 10 years: $39,590 taxes + $40K housing = $79,590 savings vs TX. Trade-offs: Fargo feels VERY small (130K vs Austin 2.4M, limited restaurants/music/culture/diversity), harsh winters (-15°F Jan, 6+ months cold), isolation (4hrs Minneapolis, 7hrs Denver). WINS for: tax minimizers (LOWEST state income tax nationally), families prioritizing safety (2nd-lowest crime) + schools (ND #10 K-12 nationally) + affordable housing ($310K Fargo vs $650K Denver), retirees (SS exempt + near-zero pension tax + safe). LOSES for: urban lifestyle lovers (Austin/Denver culture > Fargo prairie town), warm-weather seekers (ND brutal winters), singles seeking dating pool (limited options small city). Verdict: ND best financial deal for remote workers willing to sacrifice urban culture for savings.
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How we calculate: Our North Dakota tax calculator uses official 2026 tax brackets from the North Dakota Office of State Tax Commissioner. We apply marginal tax rates correctly (only the income within each bracket is taxed at that rate) across 3 brackets: 0% on first $48,475, 1.95% up to $244,825, and 2.5% above. Standard deduction of $16,100 (single, 2026, follows federal). Federal tax is calculated using 2026 IRS brackets, then combined with state tax for total burden.
Data sources:
Verification: All tax rates and brackets verified against North Dakota Century Code Title 57 (Taxation) and ND Tax Commissioner publications. HB 1158 (2023) bracket restructure verified — created 0% bottom bracket and reduced top rate from 2.9% to 2.5% effective January 2024. Bracket thresholds ($48,475/$244,825) verified against official ND Tax Commissioner 2026 tables. Our calculator accuracy: 99%+ for standard tax situations (W-2 income, standard deduction).
Limitations: Assumes single filer, standard deduction ($16,100 single 2026), W-2 income only. Does not include: itemized deductions, credits (EITC, child tax credit), part-year residency, Social Security exemption (FULLY EXEMPT all income levels), military retirement exemption (FULLY EXEMPT), other retirement income (pensions/401k/IRA taxed at 0-1.95%). Sales tax data is Fargo 7.5% total (5% state + 2.5% local); rates vary by city (7-7.5% range). Property tax 0.98% is statewide average; actual rates vary by county (0.7-1.3% range).
For complex situations: Consult a licensed North Dakota CPA or use official tax software, especially for: multi-state income allocation, retirement income optimization (Social Security exempt, pensions 0-1.95%), business income (C-corps 4.31%, pass-throughs 0-2.5% individual rate), oil/mineral rights (severance tax implications).
Last Updated: May 2026
Verified By: Daniel · CountryTaxCalc
Contact: For corrections or questions, visit our contact page.
Last Updated: May 2026