The Tax Foundation

North Dakota

The Facts on North Dakota’s Tax Climate

Last updated July 1, 2009

Here are some basic facts on North Dakota’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 1 in North Dakota
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2009, North Dakota taxpayers had to work until April 1 to pay their total tax bill, ranking it 46th highest in the nation. This is 10 days earlier than national Tax Freedom Day (April 13). The Tax Freedom Days of neighboring states are; Montana, April 3 (ranked 42nd nationally) South Dakota, March 29 (ranked 47th nationally); and Minnesota, April 15 (ranked 9th nationally).
Full study of Tax Freedom Day, nationwide and in each state

North Dakota's State/Local Tax Burden Below National Average
Estimated at 9.2% of income, North Dakota's state/local tax burden percentage ranks 33rd highest in the nation, below the national average of 9.7%. Taxpayers in North Dakota pay $3,637 per capita in state and local taxes.
North Dakota's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008

North Dakota's 2010 Business Tax Climate Ranks 25th
North Dakota ranks 25th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Neighboring states ranked as follows: Montana (6th), South Dakota (1st) and Minnesota (43rd).
50-State Comparison of Business Tax Climates (data only)
2009 State Business Tax Climate Index, Sixth Edition (full study)

North Dakota's Individual Income Tax System
North Dakota's personal income tax system consists of five brackets and a top rate of 4.86% kicking in at an income level of $372,950. Among states levying personal income taxes, North Dakota's top rate of 4.86% is 35th highest nationally. North Dakota's 2006 individual income tax collections were $433 per person, which ranked 40th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

North Dakota's Corporate Income Tax System
North Dakota's corporate tax structure consists of five brackets with a top rate of 6.5% kicking in at $30,000. Among states that levy corporate income taxes, North Dakota's top rate ranks 29th nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $214 per capita, which ranked 14th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2009
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

North Dakota Levies Sales Tax Slightly below National Median
North Dakota levies a 5% general sales or use tax on consumers, which is below the national median of 6%. State and local governments combined collected $802 per capita in general sales taxes in 2006, which ranks 29th highest nationally. North Dakota's gasoline tax stands at 23 cents per gallon and ranks 28th highest nationally. North Dakota's cigarette tax stands at 44 cents per pack of twenty, ranking 43rd highest nationally. The sales tax was adopted in 1935, the gasoline tax in 1919 and the cigarette tax in 1927.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

North Dakota Property Taxes: Middle of the Pack
North Dakota is one of the 37 states that collect property taxes at both the state and local levels. As in most states, local governments collect far more. North Dakota's localities collected $993.80 in property taxes in fiscal year 2006, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, North Dakota collected $2.55 per capita in property taxes during FY 2006, making its combined state/local property taxes $996.35 per capita, which ranks 31st nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: North Dakota is a Beneficiary State
North Dakota taxpayers receive more federal funding per dollar of federal taxes paid than the average state. Per dollar of Federal tax collected in 2005, North Dakota citizens received approximately $1.68 in the way of federal spending. This ranks the state 6th highest nationally and represents a rise from 1995, when North Dakota received $1.47 per dollar of taxes in federal spending, ranking it 5th highest. Neighboring states and the amount of federal spending they received per dollar of federal taxes collected were: Montana ($1.47), South Dakota ($1.53), and Minnesota ($0.72).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

Related Blog Entries