Flat-Fee Tax Preparation for North Dakota Residents

North Dakota has one of the lowest income tax rates in the US — a flat rate of 2.5% (as of recent legislation) for most taxpayers

ND provides an exemption for Social Security benefits from state income tax

Oil and gas production is a major part of ND's economy — Bakken shale royalty income and working interest income are common and require specialized federal depletion and severance tax treatment

North Dakota's oil extraction tax and oil gross production tax apply to oil and gas extraction — distinct from income tax, these are industry-specific obligations

ND does not impose a state estate tax or inheritance tax — favorable for wealth transfer

ND's real estate transfer tax is minimal — a small recording fee — one of the lowest in the nation

The ND pass-through entity tax option allows eligible entities to elect entity-level taxation for SALT cap planning

Agricultural land is a major component of ND wealth — farmland sales and 1031 exchanges are significant planning opportunities for ND landowners

North Dakota Real Estate Tax

North Dakota's real estate market includes significant agricultural land and oil patch activity in western ND. Farmland and oil-related real property sales generate substantial capital gains for long-time owners. ND's minimal transfer tax and low income tax rate keep the state-level tax burden modest. Federal depreciation and depletion rules are the primary planning focus.

North Dakota Business Tax

North Dakota's very low flat income tax, no estate tax, and minimal transfer tax make it one of the lowest-tax business environments in the plains states. Oil and gas businesses face specialized state extraction taxes. The PTET election provides SALT cap relief for eligible pass-through entities. Agricultural businesses have specialized federal and state tax considerations.

Do I need to file a North Dakota state tax return?

If you are a North Dakota resident or earned ND-source income above the filing threshold, you must file a ND Form ND-1. ND's flat income tax rate is among the lowest in the country. Non-residents with ND-source income — including oil and gas royalties, wages from ND employers, or rental income from ND properties — must file a ND non-resident return.

How is oil and gas royalty income taxed in North Dakota?

Royalty income from ND oil and gas production is taxable on both federal and ND returns. On the federal return, you may claim the percentage depletion deduction (15% for oil and gas). North Dakota also imposes an oil extraction tax and oil gross production tax on production activity. Royalty recipients (as opposed to working interest owners) are not subject to the extraction taxes directly, but the producer may pass through some of these costs.

What makes North Dakota taxes unique?

North Dakota's combination of a very low flat income tax, significant oil and gas wealth, major agricultural landholdings, and no estate or inheritance tax creates a distinctive planning environment. The specialized oil and gas state tax regime (extraction and gross production taxes) adds compliance complexity for ND energy sector participants.

Does North Dakota have a pass-through entity tax?

Yes. North Dakota offers a pass-through entity tax option allowing eligible S-corps and partnerships to elect entity-level taxation. The payment is deductible on the federal return, providing potential SALT cap relief. Given ND's very low income tax rate, the dollar benefit is modest but may still be positive for affected business owners.