Does North Dakota Tax Social Security and Retirement Income?

Social Security is fully excluded

North Dakota’s return starts from federal taxable income, so the taxable part of a Social Security benefit arrives on the state return and is then taken out. Form ND-1, line 15, the Social Security benefit exclusion, subtracts the taxable portion of benefits reported on line 6b of Form 1040 or 1040-SR. There is no income limit and no age test. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

Railroad Retirement is handled on a different line with the same result. Tier 1 Social Security equivalent benefits reported on Form RRB-1099, and other retirement, unemployment or sick pay benefits from the U.S. Railroad Retirement Board that are taxable on the federal return, go on line 8. A person who receives both kinds of benefit splits the federal taxable amount between lines 8 and 15 in proportion to the gross amount of each. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Private and government pensions are taxable; military retired pay is excluded

A private-employer pension is part of federal taxable income and nothing on Form ND-1 removes it. The statute allows only the adjustments it specifically lists, and there is no general pension or retirement income exclusion among them. A pension is therefore taxed at whatever rate applies once North Dakota taxable income passes the 0% band. (North Dakota Century Code chapter 57-38, Income tax (57-38-30.3, individual income tax; 57-38-01.28, marriage penalty credit))

Military retirement benefits are fully excluded on line 14. A retired service member, or the surviving spouse of one, enters the taxable military retirement benefits reported on line 5b of the federal return. The exclusion covers retirees of the Army, Navy, Air Force, Marine Corps and Coast Guard, their reserve components and the Army and Air National Guard, and it extends to federal civil service retirement benefits earned as a dual status military technician. A copy of Form 1099-R goes with the return. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

One group of public pensions has its own exclusion. A retired licensed peace officer with at least 20 years of service, or one who retired disabled, can exclude taxable benefits paid by the employer’s retirement plan on line 9. Other state, local and federal civilian pensions are taxed like private ones. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

IRA and 401(k) withdrawals are taxable, at 0%, 1.95% or 2.5%

Traditional IRA and 401(k) withdrawals, required minimum distributions and Roth conversions are included in federal taxable income, which is line 1b of Form ND-1, and no line subtracts them. They are taxed under the ordinary rate schedule, with no age-based exclusion. Qualified Roth withdrawals are not in federal taxable income and so never reach the North Dakota return. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

Because the 0% band is measured after the federal deductions and the Social Security exclusion, the amount of withdrawals a retiree can take before any state tax is due is larger than the bracket figure. For 2026 the band ends at $49,575 of North Dakota taxable income for a single filer and $82,800 for a joint return, and income above it is taxed at 1.95% until taxable income reaches $250,400 or $304,850. (North Dakota Office of State Tax Commissioner, Form ND-1ES 2026, Estimated Income Tax for Individuals (2026 Forms ND-1 and ND-EZ Tax Rate Schedules))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest is taxed in full; 40% of long-term gains and qualified dividends is excluded

A taxpayer whose federal taxable income includes a net long-term capital gain, including a capital gain distribution from a mutual fund, can exclude 40% of it on Form ND-1, line 6. The worksheet takes the smaller of the net long-term gain and the overall net gain from federal Schedule D, so a net short-term loss reduces the amount that qualifies. At the top 2.5% rate the exclusion brings the effective rate on a long-term gain to 1.5%. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

Qualified dividends get the same treatment on a separate line. A full-year resident multiplies the qualified dividends on line 3a of the federal return by 40% and enters the result on line 13. The examples on this page treat each household’s long-term gains and qualified dividends as one figure and exclude 40% of it. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

Bank interest, ordinary dividends and short-term gains have no exclusion. Interest from U.S. obligations is subtracted on line 5: savings bonds, Treasury bills and notes, and the part of a mutual fund dividend that comes from such securities. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

The 2026 rate schedules, published with the 2026 estimated tax form, have three bands. A single filer pays 0% on North Dakota taxable income up to $49,575, 1.95% on the amount from $49,575 to $250,400, and 2.5% above $250,400. A married couple filing jointly pays 0% up to $82,800, 1.95% from $82,800 to $304,850, and 2.5% above. The examples on this page use these schedules at every income, because the 2026 Tax Table for incomes under $100,000 had not been published on the review date. (North Dakota Office of State Tax Commissioner, Form ND-1ES 2026, Estimated Income Tax for Individuals (2026 Forms ND-1 and ND-EZ Tax Rate Schedules))

The dollar amounts move every year. The statute sets base schedules and directs the Tax Commissioner to prescribe new ones each year by applying the federal cost-of-living adjustment to the bracket amounts, without changing the rates. (North Dakota Century Code chapter 57-38, Income tax (57-38-30.3, individual income tax; 57-38-01.28, marriage penalty credit))

North Dakota has no standard deduction or personal exemption of its own, because the return begins after them. The 2025 booklet states that the starting point for North Dakota taxable income perpetually conforms to the computation of federal taxable income, so federal changes to income and deductions are included by default, and it lists the increased standard deduction and the additional $6,000 for some seniors among the changes that carry through. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

The federal amounts for 2026 are $16,100 for a single filer and $32,200 for a joint return, plus $2,050 for an unmarried person 65 or older or $1,650 for each married spouse 65 or older. The examples on this page use them: $18,150 for the single retiree and $35,500 for each couple. (Internal Revenue Service, Revenue Procedure 2025-32 (2026 standard deduction and additional amounts))

The federal senior deduction is $6,000 for each person 65 or older for tax years 2025 through 2028. It is reduced by 6% of modified adjusted gross income above $75,000, or $150,000 on a joint return, and married couples must file jointly to claim it. Because it is subtracted in arriving at federal taxable income, it lowers North Dakota taxable income by the same amount. (26 U.S.C. 151(d)(5)(C), Deduction for seniors)

Joint filers may qualify for a marriage penalty credit on line 22. On the 2025 worksheet the couple’s North Dakota taxable income must be more than $81,036 and the lower of the two spouses’ qualified incomes must be more than $47,550. The booklet’s instructions for the line list qualified income as wages, net self-employment income and the taxable part of IRAs, pensions, annuities and Social Security benefits reported on lines 4b, 5b and 6b of the federal return. The maximum credit for 2025 is $312. The 2026 amounts had not been published on the review date, so the examples on this page apply the 2025 worksheet amounts to the 2026 rate schedules. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

The Tax Commissioner’s own page on the credit is narrower than the booklet’s line references. It counts those items only to the extent they are included in North Dakota taxable income, and it says not to include Social Security or Railroad Retirement benefits that are deducted from North Dakota taxable income. The statute uses the same test and lists earned income and retirement plan income, not Social Security. Benefits are fully deducted on line 15, so the examples on this page leave them out of qualified income. On that basis the third example couple, whose lower qualified income is $50,000 of IRA withdrawals, receives a credit of $20. Counting the taxable Social Security on federal line 6b, as the booklet’s wording reads, would produce the $312 maximum. (North Dakota Office of State Tax Commissioner: Marriage Penalty Tax Credit (definition of qualified income; N.D.C.C. 57-38-01.28))

Form ND-1 has no line for an age-based deduction or exemption. Its subtractions are for specific kinds of income: U.S. obligation interest, long-term gains and qualified dividends, Railroad Retirement and Social Security benefits, military pay and military retirement, and peace officer pensions. What a retiree receives on the income tax side is the Social Security exclusion, the federal age-65 amounts and senior deduction that arrive through the federal starting point, and the 0% band. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

The age-based relief is in property tax. The homestead property tax credit is for homeowners who are 65 or older, or permanently and totally disabled, whose income, counted together with the income of a spouse and any dependents, did not exceed $70,000 in the calendar year before the assessment date. There is no asset limit. (North Dakota Office of State Tax Commissioner: Homestead Property Tax Credit)

Renters of the same age and income can claim a renter’s refund from the Tax Commissioner instead. When 20% of annual rent is more than 4% of annual income, the difference is refunded, up to $600. The application is due before June 1 of the year after the rent was paid. (North Dakota Office of State Tax Commissioner, Homestead Property Tax Credit and Renter’s Refund brochure)

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from North Dakota's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which is the same wherever they live. The tax bracket calculator and the guide to taxes in retirement cover that side.

Tax Foundation figures drawn from Census data put North Dakota property taxes at 0.92% of owner-occupied home value in 2024, which ranks 22nd highest among the states. This is a comparative average: on a $400,000 home it works out to about $3,680 a year before credits, and bills differ by county, city and school district. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

The arithmetic behind a bill runs through two reductions. Assessed valuation is defined as 50% of a property’s true and full value, and residential property is then valued for tax at 9% of assessed value, so the taxable valuation of a home is 4.5% of what it is worth. A home with a true and full value of $400,000 has a taxable valuation of $18,000, and local mill levies are applied to that figure. (North Dakota Century Code chapter 57-02, General property assessment (57-02-01, assessed valuation; 57-02-27, taxable valuation; 57-02-08.9, primary residence credit))

The primary residence credit is the broadest relief the state offers. Anyone who owns a home in North Dakota and lives in it as a primary residence can apply, including homes held in trust; there are no age restrictions or income limits, and one credit is allowed per household. The credit is up to $1,600 and cannot exceed the property tax due. (North Dakota Office of State Tax Commissioner: Primary Residence Credit)

The credit is not automatic. An application must be filed online with the Office of State Tax Commissioner every year between January 1 and April 1; there is no paper form. Applications approved in the 2026 window appear as a deduction on the 2026 property tax statement, which is mailed in December 2026. Owners of mobile homes on leased lots, who pay in advance, see the credit against the 2027 tax. (North Dakota Office of State Tax Commissioner: Primary Residence Credit)

The homestead credit works by reducing taxable valuation. With income of $40,000 or less, the taxable valuation of the homestead is reduced by 100%, up to a maximum reduction of $9,000, which corresponds to $200,000 of true and full value. With income from $40,001 to $70,000 the reduction is 50%, up to $4,500 of taxable valuation or $100,000 of true and full value. Applications go to the local assessor or county director of tax equalization by April 1 of the year the property is assessed. (North Dakota Office of State Tax Commissioner: Homestead Property Tax Credit)

Income for the homestead credit is broader than taxable income. The Tax Commissioner’s guideline says income from all sources is considered and lists Social Security benefits, pensions including military pensions and IRAs, wages, dividends and interest, and net gains from the sale of property. Medical expenses that were not reimbursed are deducted before the $70,000 test is applied. (North Dakota Office of State Tax Commissioner, guideline: Property Tax Credits for North Dakota Homeowners and Renters)

Disabled veterans have a separate credit. A veteran with a service-connected disability of 50% or more, or one paid at the 100% rate for individual unemployability, who was honorably discharged or is retired from the armed forces, receives a reduction in taxable valuation scaled to the disability percentage: $9,000 at 100%, $8,100 at 90% and $7,200 at 80%. A surviving spouse remains eligible after the veteran’s death. (North Dakota Office of State Tax Commissioner: Disabled Veterans Property Tax Credit)

The state sales tax is 5% on most retail sales, with a 7% gross receipts tax on alcohol and 3% on new mobile homes. Cities and counties may levy their own sales and use taxes, and special taxes on lodging, restaurants and vehicle rentals, which the Tax Commissioner usually collects for them. (North Dakota Office of State Tax Commissioner: Sales and use tax)

For comparison with other states, the Tax Foundation puts North Dakota’s average local rate at 2.09% and its average combined state and local rate at 7.09% as of January 1, 2026, which ranks 22nd among the states. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Groceries are exempt. The statute exempts sales of food and food ingredients for human consumption from the sales tax, and then excludes six things from that definition, which are therefore taxed: alcoholic beverages, candy or chewing gum, dietary supplements, prepared food, soft drinks containing 50% or less fruit juice, and tobacco. Drugs sold under a doctor’s prescription are exempt under the same chapter, as is oxygen bought on a doctor’s written order. (North Dakota Century Code chapter 57-39.2, Sales tax (57-39.2-04, exemptions; 57-39.2-04.1, food and food ingredients))

Local tax on a large purchase is often capped. Most city and county ordinances set a maximum local tax per sale, and a buyer who was charged more can claim the excess back from the Tax Commissioner. The individual income tax booklet gives the example of $4,000 of furniture in a city with a 1% tax and a $25 maximum: the store collects $200 of state tax and $40 of local tax, and $15 is refundable. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

North Dakota collects no estate tax. An estate tax law is still on the books, but the Tax Commissioner states that no estate taxes are paid to North Dakota for deaths occurring after January 1, 2005. There is no inheritance tax, which was repealed in 1927, and no gift tax. (North Dakota Office of State Tax Commissioner: Estate tax)

One filing duty survives. A North Dakota estate tax return, Form 54-91, is required for every estate that must file a federal estate tax return, even though no state tax is due; it is filed with a copy of federal Form 706 and is due 15 months after the date of death. (North Dakota Office of State Tax Commissioner: Estate tax)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

The primary residence credit more than tripled in 2025. The Tax Commissioner’s announcement of the 2026 application period explains that the credit was created by House Bill 1158 in the 2023 session and that House Bill 1176, passed in 2025, increased it from $500 to $1,600 a year. The 2026 application window ran from January 1 to April 1, 2026. (North Dakota Office of State Tax Commissioner, news release, January 1, 2026: Primary Residence Credit application period opening January 1, 2026)

House Bill 1176 was signed on May 3, 2025. The Governor’s office describes the relief as paid for by a dedicated stream of Legacy Fund earnings, estimated at $409 million for the 2025-2027 biennium, which is expected to allow the credit to be increased in future sessions. The same bill expanded the renter’s refund and capped the growth of local property tax budgets at 3% a year, with any unused part of the 3% able to be carried forward for up to five years. (North Dakota Office of the Governor, news release, May 3, 2025: Armstrong signs property tax relief and reform package (House Bill 1176))

The cap is written as a limit on dollars levied, not on any one home’s bill. Property taxes levied in dollars by a taxing district may not exceed its base year levy, which is the highest amount levied in the three preceding years, or an adjusted prior-year levy if that is greater, increased by 3%. New levy authority approved by the district’s voters or created by a change in state law is outside the limit, so a voted school levy can still push a bill up by more. (North Dakota Century Code chapter 57-15, Tax levies and limitations (57-15-01.2, limitation on levies by taxing districts without voter approval))

A proposal to end property tax altogether was defeated in 2024. The initiated measure on the November 5, 2024 ballot that would have prohibited political subdivisions from levying any tax on real property, except for bonded indebtedness, failed by 225,889 votes to 130,038, or 63.46% to 36.54%, in the official results. (North Dakota Secretary of State, Official 2024 General Election Results: statewide measures)

No property tax or income tax measure was on the November 3, 2026 ballot. The Secretary of State lists two constitutional measures: Measure 1, which would raise the threshold for approving a constitutional amendment from a simple majority to 60%, and Measure 2, on funding school lunches. (North Dakota Secretary of State: Measures on the ballot, 2026 General Election)

On the income tax side, the 2025 booklet records two developments. Federal changes made by the 2025 budget law, including the larger standard deduction, the additional $6,000 deduction for some seniors and the higher state and local tax deduction, are part of the North Dakota starting point by default. And from tax year 2026, military pay that qualifies for the military pay deduction is no longer subject to North Dakota withholding. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

A resident is a legal resident: someone whose domicile, the permanent home to which they always intend to return, is in North Dakota. Only one home can be a legal residence, and it turns on intent and actions. A full-year resident who must file a federal return must file Form ND-1, whatever the source of the income. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

A person domiciled elsewhere can still be taxed as a full-year resident under the statutory seven-month rule. It applies to a full-year nonresident who maintains a permanent place of abode in North Dakota, meaning a dwelling with cooking and bathroom facilities suitable for year-round living, and who spends more than 210 days of the tax year in the state. It does not apply to part-year residents. Snowbirds who keep a North Dakota home but have moved their domicile to another state need to count days. (North Dakota Office of State Tax Commissioner, 2025 Individual Income Tax booklet (Form ND-1 instructions, worksheets and tax table))

Part-year residents and nonresidents compute tax on Schedule ND-1NR. Under the statute the tax is first figured on all income as if the person were a full-year resident and then multiplied by a fraction: federal adjusted gross income allocable and apportionable to North Dakota, over federal adjusted gross income from all sources less certain exempt interest. A married couple filing jointly uses the same method if either spouse was a nonresident for any part of the year. (North Dakota Century Code chapter 57-38, Income tax (57-38-30.3, individual income tax; 57-38-01.28, marriage penalty credit))

Federal law settles which state may tax retirement income after a move. Under 4 U.S.C. 114 a state may not impose income tax on the retirement income of an individual who is not its resident or domiciliary, and the definition covers qualified pension plans, IRAs, 401(k) and 403(b) plans, section 457 plans and military retired pay. A North Dakota pension paid to someone who has retired to another state is taxed, if at all, by that state. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)