North Dakota is a great place for aspiring entrepreneurs to set up shop, thanks to the state’s low cost of living, business taxes, and housing costs. But a business-friendly environment isn’t the only factor that determines the success of a new venture, of course. During a time when cash flow is crucial, avoid weighing your business down with hefty fees and penalties by staying on top of your tax obligations.
Here’s what you need to know about North Dakota’s small business taxes:
What business taxes do you pay in North Dakota?
Many new business owners already expect to pay income taxes on the money their venture generates, but chances are you’ll have other taxes you’ll need to plan for too.
In North Dakota, for instance, business owners typically pay sales tax, employer taxes, and any industry-related and local taxes that apply specifically to their company. Luckily, the state has low individual income and unemployment taxes, plus no franchise tax at all.
In the following sections, we’ll take a closer look at some of the most common taxes small businesses pay in North Dakota.
North Dakota personal income tax
Pass-through entities like sole proprietorships, partnerships, and limited liability companies (LLCs) typically don’t pay state income taxes themselves. Tax obligations are passed on to the business owners instead—they pay the taxes through their personal returns at the state’s standard rates.
In 2023, the state’s individual income tax rates range from 0% to 2.5%.
How to file and pay
If your business received income from sources in North Dakota during the tax year, you must file personal income tax returns (Form ND-1) with the North Dakota Office of State Tax Commissioner (or Tax Commissioner, for short). Individual tax returns are due by the 15th day of the fourth month after the end of the fiscal year. If your company follows the calendar year, your due date is April 15.
The Tax Commissioner allows taxpayers to file their returns electronically via the IRS Federal/State eFile program, by mail, or through an authorized tax software provider. If you want to file a paper return, send the completed tax form along with any payment to the address below:
North Dakota Office of State Tax Commissioner
PO Box 5621
Bismarck, ND 58506-5621
You may also be required to make quarterly estimated tax payments if you pay federal estimated income taxes and expect your state tax liability to exceed $1,000. Taxpayers who meet these conditions must pay 25% of their estimated tax liability on April 15, June 15, September 15, and January 15.
Make all tax payments, including estimated tax payments, through the North Dakota Taxpayer Access Point (ND TAP) online portal.
Learn more about the state’s individual income tax by visiting the North Dakota Tax Commissioner website.
North Dakota S corp and partnership tax
In addition to the tax returns filed by the business owners, North Dakota requires S corporations, partnerships, and LLCs taxed as an S corporation or partnership to file a separate tax return for the business.
Because these businesses are pass-through entities, these companies typically don’t send income tax payments along with their returns. However, they may be required to withhold North Dakota income taxes at the highest individual income tax rate for nonresident partners if their share of the business income exceeds $1,000.
How to file and pay
S corporations, partnerships, and LLCs taxed as a partnership or S corporation file the appropriate tax return (Form 60 for S corporations and Form 58 for partnerships) on the 15th day of the fourth month following the end of the fiscal year.
Businesses with ten or more owners or beneficiaries must file returns electronically through a software provider authorized by the Tax Commission. But if you don’t meet this requirement and prefer to file by mail, send your tax return to the following address:
North Dakota Office of State Tax Commissioner
600 E. Blvd. Ave. Dept. 127
Bismarck, ND 58505-0599
Find more information on the North Dakota S corp and partnership tax by going to the Tax Commissioner website.
North Dakota corporate income tax
C corporations that do business in North Dakota are subject to the state’s corporate income tax.
The corporate income tax rate in North Dakota is 1.41% to 4.31%, with additional fees on taxable income over $25,000.
How to file and pay
Corporate income tax returns (Form 40) are due on the 15th day of the fourth month following the end of the company’s fiscal year. For corporations that follow the calendar year, the tax filing deadline is April 15.
File your returns through an authorized software provider or mail them to the address below:
North Dakota Office of State Tax Commissioner
600 E. Blvd. Ave. Dept. 127
Bismarck, ND 58505-0599
Corporations that meet both of the following conditions must also pay estimated taxes quarterly:
- Income tax liability in the current year expected to exceed $5,000
- Income tax liability in the previous year exceeded $5,000
Corporate estimated tax payments must be made by the 15th day of the fourth, sixth, and ninth months of the fiscal year, as well as the 15th day of the first month following the end of the fiscal year. All corporate income tax payments, including estimated tax payments, can be made through ND TAP.
Visit the Tax Commissioner corporate income tax webpage for more details on the North Dakota corporate tax.
Sales and use tax
Companies that sell physical products and certain taxable services in the state must collect North Dakota sales tax at the point of purchase. Meanwhile, products purchased outside of North Dakota for use in the state are subject to use tax if the buyer didn’t pay sales tax on the transaction.
The general North Dakota sales and use tax rate is 5%, with exceptions on sales of alcohol (7%), new farm machinery used exclusively for agriculture production (3%), and new mobile homes (3%).
How to file and pay
Before collecting and paying state sales and use taxes, you must register for a sales and use permit via ND TAP 30 days before you make any sales. You’ll use the same system to file and pay your sales and use tax returns.
When you receive your state sales tax permit, you’ll also be assigned a monthly, quarterly, semi-annually, or yearly filing frequency based on your estimated tax liability. No matter your filing status, the deadline for your returns and tax payments is the last day of the month after the end of the reporting period.
More information on the North Dakota sales and use tax, including a full list of North Dakota sales and use tax deadlines, is available on the Tax Commissioner website.
Withholding tax
Most businesses with employees who reside or work in North Dakota are required to withhold income from the wages of those employees and pay it to the Tax Commissioner. These taxes are known as withholding taxes or employment taxes.
Withholding tax rates vary between employees because the rate is determined by factors like an employee’s wages and withholding allowances. Use the income tax withholding rates and instructions guide to calculate how much to withhold from each employee’s paycheck.
How to file and pay
Employers that pay withholding taxes must first register for an income tax withholding account through ND TAP.
Withholding tax returns (Form 306) and any tax payments are due on the last day of the month following the end of the calendar quarter (i.e., April 30, July 31, October 31, and January 31). Returns can be filed via ND TAP or sent by mail.
Employers with a total withholding tax liability of $1,000 or more in the previous year must file and pay their withholding taxes electronically. If you don’t meet this threshold and plan on filing by mail, send your completed tax form and any payments to the following address:
North Dakota Office of State Tax Commissioner
PO Box 5624
Bismarck, ND 58506-5624
Keep in mind that registered employers must file withholding returns even if there are no wages or withholding taxes to report during the tax period.
All employers also have to file Form 307, along with their state copies of their employee information returns, with the Tax Commissioner by January 31 every year. These can be submitted via ND TAP, an authorized accounting software provider, or mail to the address on the tax form.
For details on the North Dakota income withholding tax, go to the Tax Commissioner website.
Unemployment insurance tax
North Dakota employers that meet one of the following conditions must pay state unemployment insurance taxes:
- Have a quarterly payroll of $1,500 or more
- Employ at least one worker for 20 weeks in a calendar year
These taxes pay for unemployment benefits for eligible workers who no longer work at the company.
In 2023, most new employers pay 1.13% of the first $40,800 of each employee’s wages until they’re assigned a new rate by Job Service North Dakota. Established employers receive a new tax rate based on their record of unemployment taxes paid and benefits charged.
How to file and pay
Qualifying employers must register for an unemployment insurance tax account within 20 days of hiring their first employee. This can be done through the online Unemployment Insurance Employer Account System (UI EASY).
Once registration is complete, companies file and pay unemployment taxes quarterly using the same system you used to register your business. All reports and tax payments are due by the end of the month following the end of each calendar quarter.
Find out more about the state’s unemployment tax by reading the employer’s guide provided by Job Service North Dakota.
Other industry-related and local taxes
You may be subject to additional taxes depending on the type of business you own. In the state of North Dakota, these include:
- Alcohol Tax
- Aircraft Excise Tax
- Cigarette and Tobacco Products Tax
- Coal Tax
- Motor Fuel Tax
- Motor Vehicle Excise Tax
- Oil and Gas Severance Tax
- Telecommunications Tax
In addition to the taxes imposed by the state, local governments in North Dakota levy their own taxes on businesses that operate in their jurisdiction.
For instance, municipalities may charge sales and use taxes up to the maximum local rate of 3.5%. As a result, the average combined state and local sales tax rate in North Dakota is 6.97%. You can find the local sales and use tax rates for your business using the sales tax rate locator tool on ND TAP.
Because the taxes described in this section depend on your company’s location, industry, and business activities, it’s best to talk with your tax professional or accountant for a full picture of your business tax obligations.
North Dakota business tax breakdown by business type
To help you keep track of your business tax obligations, here we’ve included a chart breaking down the different taxes each business entity type usually pays in North Dakota.
Keep in mind that pass-through entities don’t pay federal income taxes at the entity level. The tax obligations of these companies are passed on to their business owners, who pay the taxes through their personal returns.
| Business type | Personal income tax | S corp and partnership tax | Corporate income tax | Sales and use tax | Withholding tax | Unemployment tax | Federal income taxes |
| C corporation | No | No | Yes | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes |
| S corporation | Yes (pass-through) | No, but may be required to withhold nonresident income | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| LLC | Depends on how it’s structured | Depends on how it’s structured | Depends on how it’s structured | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Partnership | Yes (pass-through) | No, but may be required to withhold nonresident income | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes (pass-through) |
| Sole proprietorship | Yes (pass-through) | No | No | Yes, if applicable | Yes, if you hire employees | Yes, if you hire employees | Yes, by way of individual income tax |
File your North Dakota small business taxes with Gusto
Filing and paying taxes may not be an entrepreneur’s favorite part of owning a small business, but it’s an important task nonetheless. Luckily, Gusto’s easy-to-use payroll software can do some of the heavy lifting for you.
Every time you run payroll, the platform automatically files your payroll taxes too. We’ll also notify you of any tax law changes that apply to your business so you’re never caught off guard.
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