-
Overall Rank
12
Down 2 places since 2026 -
7
Up 5 places since 2026 -
23
Down 8 places since 2026 -
17
Down 1 place since 2026 -
7
Down 1 place since 2026 -
Unemployment Insurance Tax Rank
13
Up 1 place since 2026
North Dakota ranks 12th overall on the 2027 State Tax Competitiveness Index.
Score 5.57 / 10
About North Dakota's Tax Code
North Dakota performs above average across all tax categories, ranking just outside of the top 10 states overall, as well as within the top 10 on the property tax and corporate tax components. While North Dakota’s corporate and individual income taxes have a graduated-rate structure, both rates are low, with North Dakota’s top marginal individual income tax rate tied with Arizona’s as the lowest in the country (2.5 percent). In May 2025, North Dakota lawmakers limited the growth in local property tax collections by placing a 3 percent cap on annual property tax revenue increases. The same law also raised the homestead property tax credit from $500 to $1,600 and increased the property tax credit for disabled veterans and surviving spouses from $8,100 to $9,000.
One shortcoming in North Dakota’s tax code is its throwback rule, which increases tax liability for in-state businesses making sales of tangible personal property in states with which they lack nexus.
However, North Dakota conforms to federal expensing provisions under Section 168(k) and Section 179, provides generous carryforward treatment for NOLs, and does not levy a capital stock tax, real estate transfer tax, or estate or inheritance tax.
Component Scores
#12 overall · 5.57 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #7 | 5.77 / 10 | |
| Individual Income Taxes | #23 | 5.43 / 10 | |
| Sales Taxes | #17 | 5.18 / 10 | |
| Property Taxes | #7 | 6.14 / 10 | |
| Unemployment Insurance Taxes | #13 | 5.59 / 10 |
Ranking Changes, 2020–2027
#12 in 2027 · down 3 places from 2020North Dakota ranked 9th in 2020 and ranks 12th in 2027, a decline of 3 places. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 9 (5.61) | 5 (5.68) | 14 (5.56) | 15 (5.24) | 5 (6.33) | 15 (5.43) |
| 2021 | 13 (5.47) | 5 (5.70) | 19 (5.38) | 17 (5.20) | 8 (5.85) | 15 (5.35) |
| 2022 | 10 (5.58) | 6 (5.74) | 20 (5.41) | 14 (5.25) | 7 (5.93) | 4 (5.97) |
| 2023 | 10 (5.59) | 7 (5.72) | 21 (5.38) | 15 (5.20) | 6 (6.21) | 6 (5.88) |
| 2024 | 9 (5.67) | 10 (5.68) | 11 (5.82) | 15 (5.21) | 6 (6.25) | 18 (5.34) |
| 2025 | 10 (5.66) | 10 (5.62) | 13 (5.73) | 16 (5.19) | 3 (6.33) | 13 (5.58) |
| 2026 | 10 (5.63) | 12 (5.55) | 15 (5.77) | 16 (5.16) | 6 (6.17) | 14 (5.60) |
| 2027 | 12 (5.57) | 7 (5.77) | 23 (5.43) | 17 (5.18) | 7 (6.14) | 13 (5.59) |
North Dakota Compared across the States
#12 overallEach row places the states on a 0 to 10 score scale for one measure. North Dakota is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#12 5.57
Corporate Taxes
#7 5.77
Individual Income Taxes
#23 5.43
Sales Taxes
#17 5.18
Property Taxes
#7 6.14
Unemployment Insurance Taxes
#13 5.59
- North Dakota
- Other states, by rank (1st to 50th)
- 50-state median
North Dakota and Its Neighbors
#12 overallNorth Dakota borders 3 states and ranks 12th overall; 2 of them rank higher and 1 ranks lower.
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South Dakota #2 Score 7.56 10 places better -
Montana #7 Score 6.05 5 places better -
North Dakota #12 Score 5.57 This state -
Minnesota #41 Score 4.49 29 places behind
What Each Component Includes
The five components of the Index, what each one covers, and where North Dakota lands. Open any component for the full breakdown.
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Corporate Taxes
Rank #7Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for North Dakota → -
Individual Income Taxes
Rank #23Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for North Dakota → -
Sales Taxes
Rank #17Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for North Dakota → -
Property Taxes
Rank #7Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for North Dakota → -
Unemployment Insurance Taxes
Rank #13Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for North Dakota →
Tax Data Explorer
Every policy variable behind North Dakota's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
149 data points · Shaded values differ from North Dakota
Corporate Taxes: Corporate Income Tax Rates
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Bracket 1 | 1.41% > $0 | 9.8% > $0 (differs) | 6.75% > $0 (differs) | None (differs) |
| Bracket 2 | 3.55% > $25,000 | n.a. (differs) | n.a. (differs) | n.a. (differs) |
| Bracket 3 | 4.31% > $50,000 | n.a. (differs) | n.a. (differs) | n.a. (differs) |
| Gross Receipts Tax | No | No | No | No |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Job Credits | No | No | Yes (differs) | No |
| Research and Development Credits | Yes | Yes | No (differs) | No (differs) |
| Investment Credits | Yes | Yes | No (differs) | No (differs) |
| Compensation Expenses Deductible | n.a. | n.a. | n.a. | n.a. |
| Cost of Goods Sold Deductible | n.a. | n.a. | n.a. | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Conforms to Federal NOL Treatment | Yes | No (differs) | No (differs) | n.a. (differs) |
| Carryback (Years) | Conforms to federal treatment | 0 (differs) | 3 (differs) | n.a. (differs) |
| Carryback Cap | Conforms to federal treatment | $0 (differs) | $500,000 (differs) | n.a. (differs) |
| Carryforward (Years) | Conforms to federal treatment | 15 (differs) | 10 (differs) | n.a. (differs) |
| Carryforward Cap | Conforms to federal treatment | 70% (differs) | Unlimited (differs) | n.a. (differs) |
Corporate Taxes: Treatment of Capital Investment
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Section 168(k) Expensing | 100% | 20% (differs) | 100% | 100% |
| Conforms to Section 163(j) Limitation | Yes | Yes | Yes | No (differs) |
| GILTI Inclusion | 30% Inclusion | 50% Inclusion (differs) | 20% Inclusion (differs) | n.a. (differs) |
| Section 174 Expensing | Yes | No (differs) | Yes | Yes |
| Section 168(n) Expensing | Yes | Yes | Yes | Yes |
Corporate Taxes: Other Corporate Base Variables
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | n.a. (differs) |
| Conformity Status | Rolling | Static (current) (differs) | Rolling | n.a. (differs) |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes | n.a. (differs) |
| Allows Federal Depletion | Yes | Partial (differs) | Yes | n.a. (differs) |
| Throwback Rule | Yes | No (differs) | Yes | n.a. (differs) |
| Foreign Tax Deductibility | No | No | No | n.a. (differs) |
| Corporate AMT | No | Yes (differs) | No | n.a. (differs) |
| Brackets Indexed for Inflation | No | Flat CIT (differs) | Flat CIT (differs) | n.a. (differs) |
Individual Income Taxes: Individual Income Tax Rates
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Bracket 1 | 1.95% > $49,575 | 5.35% > $0 (differs) | 4.7% > $0 (differs) | No Income Tax (differs) |
| Bracket 2 | 2.5% > $250,400 | 6.8% > $33,310 (differs) | 5.65% > $47,500 (differs) | n.a. (differs) |
| Bracket 3 | n.a. | 7.85% > $109,430 (differs) | n.a. | n.a. |
| Bracket 4 | n.a. | 9.85% > $203,150 (differs) | n.a. | n.a. |
| Standard Deduction (Single Filer) | $16,100 | $15,300 (differs) | $16,100 | n.a. (differs) |
| Personal Exemption (Single Filer) | n.a. | n.a. | n.a. | n.a. |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | n.a. | n.a. |
| Personal Exemption per Dependent | n.a. | $5,300 (differs) | n.a. | n.a. |
| Personal Exemption Credit per Dependent | n.a. | n.a. | n.a. | n.a. |
| Average Local Income Tax Rate | None | None | None | None |
| Surtaxes on Wage Income | n.a. | n.a. | n.a. | n.a. |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Marriage Penalty | Yes | Yes | No (differs) | n.a. (differs) |
| Married Couples Can File Separately on One Return | No | No | No | n.a. (differs) |
| Convenience Rule | No | No | No | No |
| Interest Taxed | Yes | Yes | Yes | n.a. (differs) |
| Dividends Taxed | Yes | Yes | Yes | n.a. (differs) |
| Capital Gains Taxed | Yes | Yes | Yes | n.a. (differs) |
| Combined Capital Gains Tax Rate | 1.5% | 10.85% (differs) | 4.1% (differs) | n.a. (differs) |
| Tax Brackets Indexed for Inflation | Yes | Yes | Yes | n.a. (differs) |
| Standard Deduction Indexed for Inflation | Yes | Yes | Yes | n.a. (differs) |
| Personal Exemption Indexed for Inflation | Yes | Yes | Yes | n.a. (differs) |
| Progressivity Ratio | 1.00 | 1.45 (differs) | 1.00 | n.a. (differs) |
Individual Income Taxes: Other Individual Base Variables
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | n.a. (differs) |
| Conformity Status | Rolling | Static (current) (differs) | Rolling | n.a. (differs) |
| Credits for Taxes Paid to Other States | Yes | Yes | Yes | n.a. (differs) |
| AMT Levied | No | Yes (differs) | No | n.a. (differs) |
| Recognition of S Corporation Status | Yes | Yes | Yes | Yes |
| Section 179 Expensing Limit | $2,560,000 | $2,560,000 | $2,560,000 | $2,560,000 |
| Tips | Exempt | Taxable (differs) | Exempt | n.a. (differs) |
| Overtime | Exempt | Taxable (differs) | Exempt | n.a. (differs) |
| Filing and Withholding Threshold Index | 3.333 | 5 (differs) | 10 (differs) | 10 (differs) |
Individual Income Taxes: Other Individual Income Variables
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Income Recapture | No | No | No | n.a. (differs) |
Sales Taxes: Sales and Excise Tax Rates
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| State Sales Tax Rate | 5.00% | 6.88% (differs) | n.a. (differs) | 4.20% (differs) |
| Average Local Sales Tax Rate | 2.09% | 1.26% (differs) | 0.00% (differs) | 1.91% (differs) |
| Maximum Local Sales Tax Rate | 3.75% | 3.00% (differs) | None (differs) | 4.50% (differs) |
| Gasoline Tax (Cents per Gallon) | 23.03 | 32.70 (differs) | 33.75 (differs) | 30.00 (differs) |
| Diesel Tax (Cents per Gallon) | 23.03 | 32.7 (differs) | 30.5 (differs) | 30 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $0.44 | $3.88 (differs) | $1.70 (differs) | $1.53 (differs) |
| Beer Tax (Dollars per Gallon) | $0.43 | $0.47 (differs) | $0.1387 (differs) | $0.2742 (differs) |
| Spirits Tax (Dollars per Gallon) | $4.93 | $8.74 (differs) | $10.55 (differs) | $4.93 |
| Vapor Tax Ratio to Cigarette Tax | n.a. | 248.5833% (differs) | n.a. | n.a. |
Sales Taxes: Business-to-Business Exemptions
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | n.a. (differs) | Some Taxable |
| Farm Equipment | Partial | Exempt (differs) | n.a. (differs) | Taxable (differs) |
| Office Equipment | Taxable | Taxable | n.a. (differs) | Taxable |
| Manufacturing Machinery | Taxable | Exempt (differs) | n.a. (differs) | Taxable |
| Manufacturing Raw Materials | Exempt | Exempt | n.a. (differs) | Exempt |
| Business Fuel and Utilities | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Business Leases and Rentals | Taxable | Taxable | n.a. (differs) | Taxable |
| Information Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Software as a Service (SaaS) | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Platform as a Service (PaaS) | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Digital B2B Products | Exempt | Taxable (differs) | n.a. (differs) | Taxable (differs) |
| Payroll Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Data Center Purchases | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Digital Advertising Tax | No | No | No | No |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Groceries | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Clothing | Taxable | Exempt (differs) | n.a. (differs) | Taxable |
| Prescription Medication | Exempt | Exempt | n.a. (differs) | Exempt |
| Nonprescription Medication | Taxable | Exempt (differs) | n.a. (differs) | Taxable |
| Gasoline | Exempt | Exempt | n.a. (differs) | Exempt |
| Landscaping | Exempt | Taxable (differs) | n.a. (differs) | Taxable (differs) |
| Repair Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Real Estate Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Parking | Exempt | Taxable (differs) | n.a. (differs) | Taxable (differs) |
| Dry Cleaning | Exempt | Taxable (differs) | n.a. (differs) | Taxable (differs) |
| Fitness Services | Exempt | Taxable (differs) | n.a. (differs) | Taxable (differs) |
| Barber Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Veterinary Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| E-Books | Exempt | Taxable (differs) | n.a. (differs) | Taxable (differs) |
| Streaming Video | Exempt | Taxable (differs) | n.a. (differs) | Taxable (differs) |
| Medical Services | Exempt | Exempt | n.a. (differs) | Exempt |
| Legal Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Financial Services | Exempt | Exempt | n.a. (differs) | Exempt |
| Accounting Services | Exempt | Exempt | n.a. (differs) | Taxable (differs) |
| Sales Tax Holiday | No | No | n.a. (differs) | No |
Sales Taxes: Sales Tax Structure
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | n.a. (differs) | Yes |
| Unified Tax Administration | Yes | Yes | n.a. (differs) | Yes |
| Safe Harbor for Remote Sellers | Gross Sales Threshold | Sales or Transactions Threshold (differs) | n.a. (differs) | Gross Sales Threshold |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Property Tax Collections per Capita | $1,684 | $2,041 (differs) | $2,173 (differs) | $1,864 (differs) |
| Property Tax as a Percentage of Personal Income | 2.34% | 2.70% (differs) | 3.14% (differs) | 2.47% (differs) |
| Assessment Limit | Yes | No (differs) | No (differs) | Yes |
| Levy Limit | Yes | No (differs) | Yes | Yes |
| Capital Stock Tax Rate | None | None | None | None |
| Capital Stock Tax Maximum Payment | n.a. | n.a. | n.a. | n.a. |
| Payment Options for Capital Stock and Corporate Income Taxes | n.a. | n.a. | n.a. | n.a. |
Property Taxes: Property Tax Bases
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Tangible Personal Property Tax | Partial | Partial | Yes (differs) | Partial |
| Tangible Personal Property De Minimis Exemption | n.a. | n.a. | $1,000,000 (differs) | n.a. |
| Intangible Property Tax | No | No | No | Yes (differs) |
| Inventory Tax | No | No | No | No |
| Real Estate Transfer Tax | No | Yes (differs) | No | Yes (differs) |
| Split Roll | Yes | Yes | Yes | Yes |
| Split Roll Ratio | 1.11 | 2.00 (differs) | 1.97 (differs) | 1.23 (differs) |
| Estate Tax | No | 16% (differs) | No | No |
| Inheritance Tax | No | No | No | No |
| Gift Tax | No | No | No | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Minimum Rate | 0.07% | 0.40% (differs) | 0.13% (differs) | 0.00% (differs) |
| Maximum Rate | 9.67% | 9.30% (differs) | 6.30% (differs) | 9.13% (differs) |
| Taxable Wage Base | $46,600 | $44,000 (differs) | $47,300 (differs) | $15,000 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.01% | 0.10% (differs) | 0.00% (differs) | 0.00% (differs) |
| Most Favorable Schedule: Maximum Rate | 5.40% | 9.00% (differs) | 6.12% (differs) | 9.30% (differs) |
| Least Favorable Schedule: Minimum Rate | 0.01% | 0.40% (differs) | 1.62% (differs) | 0.00% (differs) |
| Least Favorable Schedule: Maximum Rate | 5.40% | 9.40% (differs) | 6.12% (differs) | 9.45% (differs) |
| Employer Contributions as a Share of Total Wages | 0.41% | 0.44% (differs) | 0.73% (differs) | 0.10% (differs) |
| Employer Contributions as a Share of Taxable Wages | 0.71% | 0.90% (differs) | 1.15% (differs) | 0.33% (differs) |
| Trust Fund Solvency Ratio | 1.03 | 0.3 (differs) | 1.59 (differs) | 1.7 (differs) |
| New Employer Rate | 1.00% | 3.00% (differs) | 3.00% (differs) | 1.20% (differs) |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Experience Formula Based On | Reserve Ratio | Benefits Ratio (differs) | Reserve Ratio | Reserve Ratio |
| Benefits Charged in Proportion to Base-Period Wages | Yes | Yes | Yes | No (base-period employers in inverse chronological order) (differs) |
| Charged If Employee's Benefit Award Is Reversed | No | No | No | No |
| Charged for Reimbursements on Combined Wage Claims | Yes | No (differs) | Yes | Yes |
| Charged If Employee Left Voluntarily | No | No | No | No |
| Charged If Employee Was Discharged for Misconduct | No | No | No | No |
| Charged If Employee Refused Suitable Work | Yes | Yes | Yes | Yes |
| Charged If Employee Continues to Work Part-Time | No | No | No | Yes (differs) |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | North Dakota | Minnesota | Montana | South Dakota |
|---|---|---|---|---|
| Solvency Tax | No | Yes (differs) | No | Yes (differs) |
| Taxes for Socialized Costs or Negative Balance Employers | No | No | No | No |
| Loan and Interest Repayment Surtaxes | No | Yes (differs) | No | No |
| Reserve Taxes | No | No | No | No |
| Surtaxes for UI Administration or Non-UI Purposes | No | Yes (differs) | Yes (differs) | Yes (differs) |
| Temporary Disability Insurance | No | No | No | No |
| Voluntary Contributions | Yes | Yes | No (differs) | Yes |
| Years to Qualify for Experience Rating | 1 | 1 | 3 (differs) | 2 (differs) |
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About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
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