North Dakota has a progressive income tax system with 3 brackets: 0% on the first $50,400, 1.95% up to $254,650, 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 $653 (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, alongside a Legacy Fund of oil savings (roughly $14-15 billion in 2026).
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 with tax year 2023. The bill created a new 0% bracket (indexed annually; about the first $50,400 of taxable income for single filers in 2026, an indexed estimate) 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 Legacy Fund (oil savings, similar in concept to the Alaska Permanent Fund; roughly $14-15 billion in 2026) provides long-term stability.
How it compares:
2026 structure: The 0-2.5% structure continues for 2026; the bracket thresholds are indexed to inflation each year.
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 | $166 | $7,836 | $67,164 | 10.4% |
| $100,000 | $13,170 | $653 | $13,823 | $86,177 | 13.8% |
| $150,000 | $24,734 | $1,628 | $26,362 | $123,638 | 17.6% |
| $250,000 | $51,304 | $3,578 | $54,882 | $195,118 | 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 $653 in state tax alone.
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Migration Trends: North Dakota reported a record population of 799,358 as of July 1, 2025, with positive net migration in recent years (Governor's office announcement), though many residents, especially young adults, also leave. Common destinations include:
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% | $653 | Baseline |
| South Dakota | 0% | $0 | -$653 (save) |
| Montana | 4.7-5.65% | $4,289 | +$3,636 (higher) |
| Minnesota | 5.35-9.85% | $5,277 | +$4,624 (higher) |
| Wyoming | 0% | $0 | -$653 (save) |
Key insight: North Dakota's 0% bottom bracket makes it the LOWEST income tax burden among income tax states. At $100K income, ND ($653 state tax) saves $3,636/year vs Montana ($4,289), $4,624/year vs Minnesota ($5,277), $4,258/year vs California ($4,911). Only South Dakota (0%) and Wyoming (0%) beat ND on income tax alone, saving $653/year. But total burden matters:
Total tax burden at $100K income + $40K annual spending + $310K home:
Result: North Dakota's 6.8% total burden is competitive — beats Minnesota (11.1%), a little behind Montana (6.2%), and further behind South Dakota (4.9%) and Wyoming (3.4%). ND's 0% bottom bracket means income tax is almost irrelevant at moderate incomes; the difference vs South Dakota is now just $653/year. ND offers excellent balance: near-zero income tax + moderate sales/property tax + oil-funded services (free tuition programs, infrastructure) + Legacy Fund savings for stability.
North Dakota's income tax has 3 progressive brackets for 2026: 0% on the first $50,400 of income, 1.95% from $50,400 to $254,650, and 2.5% above $254,650 — 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 $50,400 (after standard deduction) pay $0 in state income tax. At $100K income, you pay just $653 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 distributions (7% of the five-year average fund balance, transferred in odd-numbered years). This funds: $2.4B K-12 education, $1.6B higher education (free tuition programs for residents), $950M infrastructure. ND legislature cut income tax 2023 (2.9% to 2.5%) through HB 1158.
North Dakota is not currently shrinking: the state reported a record 799,358 residents as of July 1, 2025 (up 2,790 from 2024, up 20,264 since the 2020 census, the fourth consecutive year of growth, with positive net migration per the Governor's office). Some residents still leave, and the state has struggled to retain young adults, due to: oil boom/bust cycles (volatility scares long-term residents), harsh winters (6+ months cold), isolation (Fargo is the largest city, with limited urban amenities vs Minneapolis 4 hours away), and brain drain (UND/NDSU grads leave for Minneapolis/Denver/Chicago for higher pay + culture). Some young workers move OUT to MN/MT/TX for lifestyle despite higher taxes (MN 9.85% vs ND effective 0.7% at $100K = $4,624 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 $50,400 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. 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 a sovereign wealth fund created by constitutional amendment (similar in concept to the Alaska Permanent Fund or Norway's oil fund) that saves a share of state oil and gas tax revenue. The state's Retirement and Investment Office reported a balance of $13.97 billion on January 31, 2026, and press reports put it at slightly more than $15 billion by May 31, 2026. Under Article X, section 26 of the North Dakota Constitution, the distribution to the state budget on July 1 of each odd-numbered year equals 7% of the five-year average fund balance, so it is a biennial budget transfer, not a flat annual amount and not a per-resident dividend like the Alaska PFD. No change to the 0-2.5% rate structure is scheduled for 2026.
YES, IF you prioritize ultra-low taxes + affordability + safety over urban culture and warm climate. At $120K remote salary: ND $1,043 state income tax (0.87% effective — 0% on first ~$50,400, 1.95% on remainder) + $3,627 property (0.98% × an assumed $370K Fargo home) + $3,720 sales (about 7.75% × $48K spending) = $8,390 total (7.0% burden). Compare Austin TX: $0 income + $7,400 property (1.8% × an assumed $410K home) + $3,960 sales (8.25% × $48K, the Texas combined maximum: 6.25% state + 2% local) = $11,360 total (9.5%). ND saves about $2,970/year + $40K cheaper assumed housing = about $42,970 total savings first year. Over 10 years: $29,700 taxes + $40K housing = about $69,700 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, schools and affordable housing, 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 the North Dakota rate schedule (0%, 1.95%, 2.5%) with 2026 bracket thresholds indexed from the Tax Commissioner's published 2025 schedule. We apply marginal tax rates correctly (only the income within each bracket is taxed at that rate) across 3 brackets: 0% on first $50,400, 1.95% up to $254,650, 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: three brackets (0%, 1.95%, 2.5%) from tax year 2023, top rate reduced from 2.9% to 2.5%. The 2026 thresholds ($50,400/$254,650 of taxable income) are inflation-indexed estimates derived from the published 2025 schedule ($48,475/$244,825); the Tax Commissioner had not published a 2026 schedule when this page was reviewed. 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 uses an approximate Fargo combined rate of 7.75% (5% state + local; commercial rate tables, not yet verified against the Tax Commissioner); rates vary by city. 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: October 2026
Verified By: Daniel · CountryTaxCalc
Contact: For corrections or questions, visit our contact page.
Last Updated: October 2026