North Dakota's 2023 tax reform slashed income taxes to approximately 1.1% — one of the lowest rates of any state that has an income tax, rivaling the no-income-tax states.
North Dakota's 2023 reform was one of the most dramatic income tax reductions of any state in recent history. The state went from a progressive system with multiple brackets to a near-flat 1.1% effective rate for most filers. Married filers with income below $44,725 pay zero North Dakota income tax. ND uses federal taxable income as its base. On a $75,000 salary, North Dakota income tax is roughly $650–$800 per year — comparable to living in a near-no-income-tax state. No ND city levies a local income tax.
North Dakota's dramatic income tax reduction was made possible by oil revenues. The Bakken Formation — one of the largest oil-producing regions in the United States — generates billions of dollars in oil extraction taxes and royalties that fund North Dakota's state government. When oil prices are high, North Dakota's general fund overflows. Legislators used a portion of these surpluses to enact HB 1158 in 2023, reducing the income tax to levels that are practically indistinguishable from zero for most workers. The effective rate of ~1.1% means a worker earning $80,000 pays roughly $800 per year in North Dakota income tax — less than two days' worth of take-home pay.
North Dakota voters rejected full elimination in 2024. A ballot measure that would have completely eliminated North Dakota's income tax went to voters in 2024 and was rejected — primarily due to concerns about funding public schools and local services that rely on income tax revenue. However, the 2023 HB 1158 reform already achieved most of the practical effect of elimination. The ongoing political pressure suggests further cuts are possible, but the 2024 rejection shows that even in a conservative state, total elimination faces resistance when school funding is at stake.
Fargo and Bismarck are the economic anchors of a surprisingly prosperous state. Fargo-Moorhead (the Moorhead side is in Minnesota, with a 9.85% top income tax rate — a stark contrast) is home to Microsoft's Fargo campus, Sanford Health (a major regional healthcare system), and a growing tech ecosystem. Bismarck, the state capital, has a government and energy industry economy. Grand Forks hosts the University of North Dakota and a significant Air Force base. Williston, in the Bakken oil patch, has a boom-bust economy tied directly to oil prices — but at peak production years, workers earned $80,000–$120,000 in trade and energy jobs.
One notable quirk: Fargo is a twin city with Moorhead, Minnesota. Workers who live in Fargo pay North Dakota's ~1.1% income tax. Workers who live in Moorhead pay Minnesota's progressive tax up to 9.85%. The two cities are separated only by the Red River. At $100,000, the income tax difference between a Fargo address and a Moorhead address is roughly $8,500 per year — the largest per-mile income tax difference of any major metro area in the US.
Estimates only. ND ~1.1% flat on federal taxable income (2023 HB 1158 reform). Married filers under $44,725 may pay $0 ND tax. Rates are approximate — consult a tax professional for exact amounts.
| Gross Pay (this check) | $0.00 |
| Federal Income Tax | −$0.00 |
| North Dakota State Tax (~1.1%) | −$0.00 |
| Social Security (6.2%) | −$0.00 |
| Medicare (1.45%) | −$0.00 |
| Net Take-Home Pay | $0.00 |
Following HB 1158 (2023), North Dakota's income tax rate is approximately 1.1% flat on taxable income for most filers. Married filing jointly with income under $44,725 pay 0% North Dakota income tax. The 1.1% rate applies to federal taxable income (after the federal standard deduction of $16,100 for single filers). At $75,000 (single), North Dakota state income tax is roughly $650–$750 per year.
North Dakota's Bakken Formation oil production generated massive tax revenues in the early 2020s. The state built up substantial budget surpluses. Legislators chose to return a significant portion to workers through HB 1158, which eliminated most of the progressive income tax brackets and replaced them with a near-flat 1.1% rate. The tax cut was feasible because oil revenues fund a large share of North Dakota's budget, reducing the state's dependence on income tax revenues compared to most states.
No. A 2024 ballot measure to completely eliminate North Dakota's income tax was rejected by voters. Concerns centered on school funding — a significant share of local school district budgets depends on income tax distributions. The measure failed despite support from many business groups and tax-cut advocates. However, the existing HB 1158 reform remains in place, keeping the rate at approximately 1.1% — effectively near-zero for practical purposes.
Fargo, North Dakota and Moorhead, Minnesota are twin cities separated by the Red River. Fargo residents pay North Dakota's ~1.1% income tax. Moorhead residents pay Minnesota's progressive income tax up to 9.85%. At $100,000, the annual income tax difference between a Fargo address and a Moorhead address is approximately $8,000–$9,000 per year. For workers employed in either city who can choose where to live, the Fargo side of the metro offers dramatically lower income taxes.
No. Fargo, Bismarck, Grand Forks, Minot, Williston, and all other North Dakota municipalities do not levy local income taxes on wages. North Dakota workers pay only the state income tax (~1.1%) with no city surcharge.
On $75,000 (single, biweekly), North Dakota income tax is approximately $25–$30 per paycheck — roughly $650–$750 annually. After the $16,100 federal standard deduction, federal taxable income is about $58,900. At 1.1%, the annual state tax is roughly $648. This is dramatically lower than any comparable neighboring state — South Dakota and Wyoming have $0 (no income tax), while Minnesota's top rate would cost roughly $4,500+ on the same income.
North Dakota taxes overtime and tips at the regular ~1.1% flat state rate. Given how low this rate is, the state income tax impact on overtime and tips is minimal — roughly $1.10 per $100 of additional income. The federal exemptions under the One Big Beautiful Bill still apply to reduce your federal income tax on qualifying tip and overtime income. See our Tips Tax Calculator for combined savings.