Corporate Income Taxes Unemployment Taxes Workers Compensation Sales and Use Tax Local Sales and Use Tax Individual Income Tax

Your ability to turn a profit in North Dakota will not be hindered by our tax system. We strive to keep taxes fair and reasonable by distributing the burden across all economic sectors. Our tax codes are clear and concise and our tax incentives allow for a rapid return on your investment. Corporate Income Taxes While all corporations having income sources in the state must file an income tax return, North Dakota allows the entire amount of federal income tax liability to be deducted before calculating state corporate tax. So even though our tax rate ranges from 3% to 10.5%, the effective rate becomes 2.55% to 6.83%. Only four other states allow corporations to deduct their federal tax liability. Corporate Tax Rates* ND Taxable   Assumed Effective Income Rate Federal Rate Rate Up to $3,000 3.0% 15% 2.55% $3,001 to $8,000 4.5% 15% 3.83% $8,001 to $20,000 6.0% 15% 5.10% $20,000 to $30,000 7.5% 15% 6.38% $30,001 to $50,000 9.0% 15% 7.65% $50,000 and Up 10.5% 35% 6.83% *These rates have remained the same since 1983. A primary sector business may also qualify for a five-year income tax exemption. Primary sector business: "one which creates wealth by using knowledge or labor to add value to a product, process or service." Examples of primary sector business: manufacturing, agricultural processing and "back office" operations such as telemarketing. Other items that may qualify for corporate tax credit include: Research expenditures within the state. Seed capital investments. Wages and salaries for new businesses. TOP Unemployment Taxes The North Dakota Legislature lowered unemployment tax rates again in 1995. The rate for new businesses, other than those in the construction industry, is 2.2% on the first $14,200 of wages per employee. New employer rates extend for one to two years after which an experience rating system is used to calculate rates. The average employer rate has been on the decline since 1988, falling from 1.54% to .63% of payroll. TOP Workers Compensation Workers compensation premiums are among the lowest in the nation. While many states apply premiums to an entire payroll, North Dakota's rates apply to only the first $15,600 of wages per employee. Premiums are paid annually and based on specific job classifications and accident experience over a number of years. Workers Compensation Premiums N.D. Class Description Rate per $100 in wages Max. Charge at $15,600 wage cap 2014 Food Processing - Grain Milling $5.84 $911.04 3124 Manufacturing of Light Metal or Non-Metal Goods $3.71 $578.76 3504 Foundries - Implement or Equipment Manufacturing  $7.61 $1,187.16 8292 General Warehouse and Storage $5.56 $867.36 8805 Clerical Office Employees $.32  $49.92 TOP Property North Dakota does not tax personal property. That means you don't pay taxes on equipment, inventory, materials in process or accounts receivable. Real property, such as land and actual fixed improvements to the land (including buildings), is taxed by the county. However, any new or expanding business may be granted an exemption for up to five years. Extensions of up to an additional five years are available for: 1) agricultural processors and 2) a project located on property leased for a governmental entity. Local governments and any project operator may negotiate payments in lieu of the property tax for a period of 20 years from the date project operations begin. Other possible exemptions: New single family residences-full or partial exemption. Rehabilitation of buildings more than 25 years old-up to three years exemption of added property value from communities. A five-year exemption for a geothermal, solar or wind energy system. TOP Sales and Use Tax North Dakota's general sales tax rate is 5%. New or expanding businesses qualify for an exemption on machinery, building materials and equipment used for manufacturing, processing or recycling. There is no sales tax on electricity, water or money and only a 2% tax on natural gas when used for direct manufacturing purposes. Interstate communications over phone lines and materials used to construct an agricultural processing plant are not taxed. Of a possible 164 taxable services, North Dakota taxes only 21. TOP Local Sales and Use Tax Local subdivisions are also allowed to levy a sales tax. The rate in all cities that currently levy such a tax is 1%. This tax applies only to the first $2,500 on any given purchase. TOP Individual Income Tax A vast majority of North Dakotans file the state's short tax form (95%). Individual income tax is calculated by multiplying the federal income tax liability (before federal credits) by fourteen percent.